The Organisation for Economic Co-operation and Development (OECD) has called on the Central Bank of Ireland to add consumer representatives to a key advisory group on consumer matters, in order to improve its oversight of financial firms.
The OECD has also urged the Central Bank to ensure it retains “explicit consumer and investor protection objectives” as it moves next month to disband its stand-alone consumer protection unit and integrate its functions into arms of the organisation that supervise various areas, from banks and insurers to investment firms.
The recommendations follow a review by the OECD of the Central Bank’s supervisory functions against the global standards for financial consumer protection – the G20/OECD High-Level Principles on Financial Consumer Protection. The review found that the regulator’s financial consumer protection supervisory functions “are well aligned with” the global standards, even as it had some suggestions for improvement.
“The Central Bank is a mature and sophisticated oversight body and has appropriate policies and practices in place to effectively monitor financial markets, identify risks to consumers and improve outcomes for consumers,” the OECD report said. “The OECD assessment found that the Central Bank is strongly committed to fostering and upholding the G20/OECD Principles, aligns with international standards and that its practices are consistent with peer regulators.”
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Still, it found that the Central Bank could do more to engage with consumers and consumer groups, including carrying out periodic surveys to evaluate and track consumer behaviours and attitudes towards financial products and services, and having more contact with small businesses in their capacity as consumers of financial services.
It said that the regulator’s Consumer Advisory Group, currently comprised of academics, regulatory figures, financial and legal experts, and a social justice advocate, could be broadened to include representatives of consumers or consumer associations – to improve how the group advises the Central Bank.
The OECD also recommended that the Central Bank assess the effectiveness of its use of Dear CEO letters to highlight consumer protection and prudential regulation issues of concern.
“While some industry representatives interviewed by the OECD noted the usefulness of Dear CEO letters in clarifying the Central Bank’s expectations, others have stated that Dear CEO letters have become more frequent, covering more topics at once, which increases the burden especially for smaller financial services providers,” the report said.
Central Bank governor Gabriel Makhlouf welcomed the findings of the OECD review.
“The Central Bank was very pleased to be a pioneer in this work, given our shared commitment to consumer protection,” he said. “In particular, we welcome that many of the OECD’s recommendations start from the consumer’s perspective, providing important insights as we work to ensure that this perspective is embedded in our integrated approach to supervision.”
Mr Makhlouf said the bank has developed a “comprehensive implementation plan to address and embed the recommendations, in line with the OECD’s expectations”.
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