The final elements of the protection code in favour of banking and credit customers are finally coming into force, writes Caroline Madden. 

After several false starts, missed deadlines and protracted industry consultations, the final elements of the consumer protection code finally come into force on Sunday. But will the long-awaited code turn out to be the panacea to all ills or will consumers not be able to spot any difference at all?

One welcome change in the new rules is that banking customers who have learned to regard the word "free" with a healthy degree of scepticism can now rest assured that it can no longer be used in a misleading context.

For example, banks will not be able to advertise a service as free if transaction and maintenance fees are waived but other charges still apply.

Also, if the customer has to meet certain conditions such as keeping a minimum balance in their account or making a minimum number of transactions in order to avoid banking charges, this can no longer be described as free banking.

Another positive upshot of the code is that consumers will no longer need a magnifying glass to ensure there are no sneaky terms and conditions lurking deep within the minuscule fine print that has become the norm in ads for financial products.

Having received a number of complaints relating to print so small as to be illegible, the Irish Financial Services Regulatory Authority (which devised the consumer protection code) has specified that the size and prominence of footnotes and fine print must correspond to the importance of the information being conveyed.

Equally, radio advertisements for financial products will no longer be able to gloss over important information by squeezing it into a rushed, incomprehensible spiel in the last few seconds of the ad.

Financial institutions advertising investment or savings products can no longer highlight the maximum possible return or interest rate unless a significant number of customers will be able to access such rates.

The financial regulator has also cracked down on lending practices. Although Ireland has not quite reached the extremes evident in the United States and Britain where credit card companies routinely send out unsolicited blank cheques, the questionable practice whereby credit institutions dangle unsolicited loan approval in front of customers has crept in in recent years.

Having decided that this practice tempted people to over-extend themselves financially by borrowing more than they needed, the regulator outlawed this practice last August, but has now gone one step further. From Sunday, credit card limits can only be increased if the customer specifically requests it.

The code will also give consumers a welcome reprieve from unwanted attention in the form of sales staff from financial institutions phoning them - or even turning up uninvited on their doorstep - trying to push their latest product, as the situations in which institutions can "cold call" consumers have been markedly curtailed.

Under the new code, all financial services providers within the ambit of the financial regulator must make sure that products or services offered to the consumer are suited to their needs and circumstances.

Unfortunately, a number of sub-prime lenders - who extend credit to people with poor credit histories - have managed to slip through the cracks.

GE Money, Start and Nua Homeloans, for example, are not regulated by the financial regulator.

This means that although they are bound by the Consumer Credit Act, they do not have to comply with the consumer credit code. These lenders are therefore not obliged to make sure that products recommended to their customers are suitable.

Some sub-prime lenders have defended this situation by arguing that, while they may not be bound by the code, they comply with the regulations voluntarily. Nonetheless, the regulator is quite concerned by this anomaly.

"While the Consumer Credit Act provides some protections . . . the code contains additional protections in relation to the sales process (knowing the consumer and suitability of product), provision of information in a clear and comprehensible manner and handling of complaints speedily, efficiently and fairly," says a spokeswoman for the regulator.

"We believe that it is important these protections are now put in place and we are working with the Department of Finance to develop proposals for amending legislation to address our concerns."

If the regulator has its way, it will only a matter of time before this situation is rectified.

This isn't the only problem identified with the new consumer protection regime.

Pat O'Sullivan of the Irish Brokers' Association (IBA) has expressed disappointment that certain basic banking products, including current accounts and overdrafts, are not covered by the "knowing your customer" element of the code, which required financial institutions to gather considerable information from the customer to enable them to recommend an appropriate product or service.

Nevertheless, O'Sullivan describes the code as a "very good first effort at levelling the playing field".

Liam Carberry of the Professional Insurance Brokers' Association (PIBA) is concerned that professionals such as solicitors and accountants are not covered by the code.

However, the regulator explains that accountants are regulated by their relevant professional body, such as Institute of Chartered Accountants in Ireland (ICAI) or the Association of Certified Chartered Accountants (ACCA), which apply their own conduct to their members.

These codes are approved by the financial regulator and reflect the provisions of the code.

Felix O'Regan of the Irish Bankers' Federation (IBF) points out that many aspects of the code were already implemented in the past by banks, either as best practice or under various voluntary codes already in place.

So will the code have been worth waiting for? The general consensus is that only time will tell.