Brokers welcome Central Bank’s review of consumer protection code

Business group Brokers Ireland welcomed the latest proposal by the Central Bank to strengthen the consumer protection code for financial products.

The Central Bank is conducting a review of the code to make sure consumers are protected and have an appropriate level of choice when it comes to financial services.

Brokers Ireland, which represents 1,300 firms, hopes the review will introduce a proportionate level of regulation that will benefit consumers without hindering brokers.

“We need better regulation, not more regulation,” said Brokers Ireland chief executive, Diarmuid Kelly.

Mr Kelly said overregulation was one of the main reasons many smaller brokers were looking to exit the market. Costs are also putting pressure on brokerages. 

In a recent report for Brokers Ireland, economist Jim Power found the costs for micro and small firms to employ full-time compliance, data protection, risk management, HR or IT staff was not proportionate to the risk they pose.

“Ireland is currently experiencing a significant withdrawal of banks and post offices from local communities. Brokers will have an increasingly important role to play in ensuring that consumers have proper access to financial services advice,” said Mr Power.

Mr Power also said there was significant consolidation happening in the industry and it was becoming more challenging for smaller brokerages to survive.

The Central Bank acknowledged that regulatory frameworks could impact the structure of markets and make it difficult for new firms to enter. However, in its proposal to review the code, it said it would ensure the flow of new entrants into the market continues to be well managed.

“Trust and confidence that firms will act in customers’ best interests is essential to the effective functioning of the financial system,” the Central Bank said.

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