PROTECTING THE INTERESTS OF CONSUMERS OF FINANCIAL SERVICES Role of Supervisory Authorities Keynote Address to the FinCoNet Open Meeting 22 April 2016 Bernard Sheridan, Chair

Overview  Protecting the best interests of consumers  Role of Supervisory Authorities  FinCoNet and its role  Challenges and opportunities faced by FinCoNet

Central Bank of Ireland – Mission Statement “Safeguarding Stability - Protecting Consumers”

Central Bank of Ireland – Statutory Objective Effective regulation of financial service providers and markets, while ensuring that the best interests of consumers are protected

The CPOR outlines our consumer protection objectives and our assessment of the current and emerging consumer environment and risks to our objectives, for full consideration by the firms we regulate in the context of our desired consumer protection outcomes. Our desired consumer protection outcomes are:  A positive consumer-focussed culture that is embedded and demonstrated within all firms.  A consumer protection framework that is fit for purpose and ensures that consumers best interests are protected.  Regulated firms that are fully compliant with their obligations and are treating their customers (existing and new) in a fair and transparent way. “ Getting it right for consumers ” 5 We have published our second Consumer Protection Outlook Report

Consumer Protection Objectives  Ensuring consumers are treated fairly and with respect and dignity by firms  Firms act in their consumers’ best interests in all that they do CBI Consumer Protection Department Mission Statement “ Getting It Right for Consumers” “We will work together and with others to strengthen and maintain protection for consumers so that financial services work in the best interests of all consumers, now and in the future”.

Protecting Consumers’ Best Interests Consumer focused outcomes – is the best outcome being delivered? Embedding a culture within firms from the top down which drives the right behaviours Listening to customers – being open to feedback and acting upon it Delivering a service which is transparent and reliable and which meets the needs of customers Fixing things when they go wrong in a way that demonstrates the firm values the customers relationship Being transparent and clear in a way that consumers can understand

Role of Supervisory Authorities  Key driver and influencer of the behaviour of regulated firms  Ensuring consumer protection framework is fit for purpose  Deciding who is authorised to provide services

G20/OECD High Level Principle 2 – the role of oversight bodies  Oversight bodies explicitly responsible for financial consumer protection, with the necessary authority to fulfil their mandates  Require:  Clear and objectively defined responsibilities and appropriate governance  Operational independence  Accountability for their activities  Adequate powers  Resources and capabilities  Defined and transparent enforcement framework  Clear and consistent regulatory processes

G20/OECD High Level Principle 2 – the role of oversight bodies  Observe high professional standards  Promotion of co-operation with other financial services oversight authorities and between authorities or departments in charge of sectoral issues  Promotion of international co-operation between oversight bodies  Specific attention for consumer protection issues arising from international transactions and cross-border marketing and sales

Central Bank of Ireland  Delivers on consumer protection legislative mandate under 3 broad functional areas: gatekeeper, policy maker/influencer, supervisor/enforcer  Challenges in delivering mandate  Difficulty in defining and measuring outcomes trying to achieve  Expectations of the role of supervisory authorities  Limited resources  Difficulty in identifying emerging risks and committing to addressing them alongside current market risks  Seeking continuous improvement – peer review every 4 years

The International Financial Consumer Protection Organisation (FinCoNet)  Formally established in 2013 to replace the informal network of supervisory authorities which has existed since 2003  International organisation of supervisory authorities with responsibility for financial consumer protection  Member based organisation set up as a not-for-profit association under French law

FinCoNet’s Mission  To promote sound market conduct and strong consumer protection through efficient and effective financial market conduct supervision with an initial focus on banking and credit consumer issues  To enhance the protection of consumers and strengthen consumer confidence by promoting robust and effective supervisory standards and practices and by the sharing of best practices among supervisors  To promote fair and transparent market practices and clear disclosure to consumers of financial services

FinCoNet Membership as at March 2016 Governing Council Members AustraliaCanadaChinaFrance IrelandJapanNetherlandsPortugalSpainSouth Africa Regular Members BrazilGermany IndonesiaKoreaLuxembourgNorwaySaudi Arabia United Kingdom Observers Consumers International EU Commission IAISOECDC-GapWorld Bank FinCoNet Governing Council FinCoNet Member Countries

Consumer Protection Work  July 2014 – publication of report on Responsible Lending  January 2016 – publication of report on Sales Incentives and Responsible Lending  Creation of a ‘Supervisory Toolbox’ - an online tool to compare supervisory mechanisms across jurisdictions  Developing a ‘Report on Online and Mobile Payments: Supervisory challenges to mitigate security risks’  Clearspace and FinCoNet website – forum for exchange of information  FinCoNet newsletters

Challenges and Opportunities for FinCoNet  Promote internationally of the need for the protection of the interests of consumers of financial services  Embed consumer protection into every supervisory framework  Develop capacity to help members engage with each other, share best practices and learn from each other  Ensure that all supervisory authorities responsible for consumer protection are aware of FinCoNet and encouraged to join  Facilitation of peer reviews and short-term exchange of staff

Questions  How can FinCoNet help promote and support further the need for protecting the best interests of consumers among supervisory authorities?  How can FinCoNet support members in shaping a positive, consumer-focussed culture in the firms which they supervise?  As members, are we supporting other members through contributing and sharing our own experiences and best practices through the newsletters and Clearspace?  Are we, as members, reaching out to other potential members to inform them of our work?