Insurers will be required to secure an “opt-in” consent from consumers when setting their policies to renew automatically under the Central Bank’s updated consumer protection code.
The code, published on Monday by the regulator, contains a raft of new measures to protect consumers against sharp practice and online fraud.
These include an “opt-in” renewal for dental, pet, gadget and travel insurance to allow consumers signal if they want their policies renewed.
Currently the process for automatic renewals is “opt-out” meaning that if consumers do not want to auto-renew an insurance policy, they have to go to the effort of opting out.
While insurers claim this eliminates the possibility of policies expiring, consumer advocacy groups claim many customers are left paying for products they no longer want and sometimes without realising.
The new code, which comes into force next year, enhances consumer protections in several areas, including digitalisation, mortgage switching, frauds and scams, and greenwashing.
It aims to make mortgage switching easier by forcing lenders to meet “new and enhanced disclosure requirements”.
Lenders will have to apprise consumers of a “personalised saving estimate (in euro) alongside each alternative mortgage refinancing option” and to provide them with a specific reminder of the mortgage refinancing options between four and eight weeks in advance.
Firms must also be more “vigilant to the evolving risks to the system and their customers from frauds and scams” and take appropriate actions to protect customers.
The Financial Services and Pensions Ombudsman (FSPO) is said to be dealing with a rise in complaints related to financial scams and so-called phishing traps.
Under the updated code, firms must also ensure customers can have no impression or misunderstanding that they are purchasing regulated products and services, “where that is not the case”.
To tackle the risk of greenwashing, firms will be required to ensure they communicate clearly on climate and sustainability features of products.
The regulator said “the modernised code” was centred on an obligation for firms to secure customers’ interests “which embodies a customer-focused mind-set where firms proactively take ownership of, and responsibility for, consumer protection”.
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“The ways in which we as consumers buy, use and engage with financial services are changing significantly,” Governor Makhlouf said.
“These changes reflect new preferences, provide new opportunities and meet different needs on the part of individuals, households and businesses. But they also create new challenges and new risks in the financial sector that we supervise and for the consumers we protect,” he said.
The update follows a review of consumer protections in Ireland by the OECD (Organisation for Economic Co-operation and Development) last year which urged the regulator to engage more with consumers to improve its supervisory function.
