An email from an insurance company landed recently. “Good news,” it began. “As you pay by direct debit we have everything set up for your policy for Tommy to automatically renew, so you don’t need to do anything.”
Tommy is a 14-year-old rescue dog who arrived with anxiety problems but, overall, a good bill of health. His pet policy has been in place since the age of four, and while essential vet bills such as dental cleaning aren’t covered, and the list of criteria for what can be claimed gets smaller and smaller as he ages, it does offer some peace of mind should expensive surgery be required. And auto-renewal is a convenient way to ensure the policy rolls over. An old dog isn’t going to find a better offer elsewhere.
But it is not just pet insurance where people have policies renewed automatically by companies. It can suit some consumers, but the practice can prevent people from shopping around and finding cheaper and better-suited options too. However, new rules that come into place next month will put an end to auto-renewal across myriad insurance products.
It’s all part of the Central Bank’s revised Consumer Protection Code, a modernised version of the long-outdated and digitally stale rules introduced in 2012. The new and improved code places a greater emphasis on financial firms taking ownership of how they operate and protect the consumer in a digital world.
Customers must be effectively informed of products and services, made aware of unregulated activities including frauds and scams, have safeguards in place if they are deemed vulnerable, and be protected from outlandish sustainability claims or “greenwashing”.
Before we get too excited about these changes, there are some exemptions to the rules. Take auto-renewal. While it applies to some products, such as the pet-insurance example above, others, such as health-insurance, car-insurance and home-insurance products, are excluded from the new code, the logic being that some consumers might simply forget to renew if they didn’t have multi-billion-euro insurance companies doing the renewal legwork for them.
While this might seem like a massive undermining of consumer people power in 2026, it is still something of a welcome discovery to find insurance products that concern travel, gadgets, dental and pet insurance fall under the remit of the new rules.
This means the non-refundable travel policy won’t automatically roll over like it did in 2020 when the world came to a standstill during Covid 19. The cover you’d forgotten about on a phone or laptop you no longer use can no longer get away with auto-renewal from its blissful hiding base in a spam folder. The effort to “opt-out” if you don’t want to renew is no longer the customer’s problem. If you do want to stay with the same provider of the insurance product, you can simply “opt-in” to renew again. The consumer holds the power.
Other changes that bring a positive and added layer of protection are in the mortgage space, and how easy it is for consumers to switch. We’re still not great at switching mortgages, possibly for fear of reliving the trauma of securing one in the first place, and yet it can be a relatively smooth if unnecessarily drawn-out process. Things like obtaining relevant paperwork and documents can take time. But all of this will get easier from the end of March.
Under the existing code, lenders must tell mortgage holders about cheaper products and their options 60 days before coming out of a fixed-rate mortgage. They must also share the pros and cons of incentives such as cashback offers, and deliver a decision on a completed mortgage-switching application within 10 days.
However, the Consumer Protection Code stipulates that a far speedier response must be in place. Lenders must also pay greater attention to the monetary value of switching options for consumers. They will have to provide mortgage holders with a personalised saving estimate in euro beside each mortgage refinancing option, with reminders of these options between four and eight weeks from the original notification. Title deeds will be provided by the lender within 10 working days of a switching request. And if this can’t be done, they will have to explain the delay and provide an assessment of when the deeds will be delivered.
Other rule changes include that banks will have to give customers six months’ notice if they are closing a branch. Until the end of March, they only have to give a two-month warning around any branch closures. This has caused serious concerns for consumers in the past, particularly in rural pockets of the country, when a branch long relied upon shuts up shop within just two months of sharing news of the closure. Consumers are often left scrabbling for an alternative, and unsure of what options are available elsewhere.
Another code change concerns advertising rules around greenwashing. The Consumer Protection Code places a new requirement on financial services firms to ensure their advertising does not mislead customers on the sustainability aspects of the company, or exaggerate the “green credentials” of the company or its business model.
The code’s reach across the financial service is also far wider than its 2012 rule book. SMEs with a turnover of less than €5 million in the past year must adhere to the code, meaning smaller firms will have to deliver a more transparent and customer-centric services.
Michael Kavanagh, chief executive of the Compliance Institute, an association for compliance professionals, said the rules will apply to any company regulated by the Central Bank, including insurance intermediaries and financial advisers. He said companies have been undertaking training in preparation for the changes.
The code addresses how financial institutions must deal with consumers in vulnerable circumstances or susceptible to financial harm and Kavanagh says the changes present some challenges around defining vulnerable customers and what constitutes financial abuse.
“But from speaking to members, firms are ready for this. They will have systems in place and consumer documentation in place, and the changes that will need to be made,” he says.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter by Conor Pope on navigating health insurance price hikes, you can read it here.
