Regulation, information, and advertising.

The financial service provider must ensure that all information that is provided to consumers is clear, accurate and up-to-date and written in plain English.  The information must be brought to the consumer’s attention.  The presentation must not disguise to conceal or obscure important information.

Information must be supplied to each consumer on a timely basis.  The financial service provider must have regard to the urgency of the situation and the time necessary for the consumer to absorb and react. It must ensure that if it communicates to a consumer using electronic media, it has arrangements in place to ensure the security of information received from the consumer and secure transmission to the consumer.

The font size used in all printed information provided to consumers must be clearly legible and appropriate to the type of document and information.  A notice regarding a change in interest rates must state the old rate and the new rate and the dates when the change applies.  Where its interest rates are published on its information services including telephone helplines, it must update such information as soon as any interest rate change comes into effect.

Disclosure Statement

A regulated entity must only use a disclosure statement set out below in the following circumstances:

• on its  business stationery used in connection with regulated activities
• on the part of its website relating to regulated activities
• on  electronic communications with consumers which are in connection with regulated activities.

It may use only use the regulatory disclosure statement in communications with the consumer relating to a regulated activity only.  It must have separate sections on its website for regulated activities and other activities.

A regulated entity must use a regulatory disclosure statement in either of the following formats depending on which he states where it is authorised, registered or licensed:

[full name] regulated by the Central Bank of Ireland or

[full name]  authorised licensed registered by [EU authority] and is regulated by the Central Bank of Ireland for the conduct of business rules.

Additional text must not be inserted  into the regulatory disclosure.

The regulatory disclosure must not be presented in such a way as to imply that it is endorsed by the Central bank or other EU competent authority.

Terms of Business

Regulated entities must draw up terms of business and provide consumers with a copy prior to  providing the first service to that consumer.  The terms of business must set out the basis on which the entity provides its regulated activities.

It must ensure at least the following:

• name, address, trading address.
• group name.
• confirmation of authorisation.
• a statement that it is subject to the CBI code of conduct and that the code can be found on centralbank.ie,
• description of regulated activities which it provides.
• if it acts as an intermediary, a description of the level of service for each product type, whether a fair analysis of the market, limited analysis and explanation of the type of service in a way  that seeks to inform the consumer
• if it is tied in relation to its regulated activities, it must specify the name of each product and service for which it is tied on the name of the regulated entity to whom it is tied.
• a general statement of charges imposed directly by the entity.
• a summary of its policy in relation to the  use of personal data
• a summary of its policy in relation to conflicts of interest,
• an outline of actions and remedies which the regulated entity may take in the event of default by a consumer.
• a summary of the complaints procedure operated by it
• name of any statutory scheme and level of protection available
• effective date of the terms of business document.

The terms of business must be provided to a consumer  in a stand-alone document. A deposit agent must give the credit institutions terms of business which mush must set out its  relationship with the credit institution.

Independence / Intermediary Issues

The term independent may only be used by an intermediary in its name or description, where the principal regulated activities which it undertakes are provided on the basis of a fair analysis of the market and the consumer, has the option to pay in full for its services by a fee.

Where the regulated entity does not provide all its activities in an independent capacity it must explain the different nature of its services in a way that seeks to inform the consumer.  There must be no ambiguity about the range of services which it provides in an independent capacity.

The term broker may only be used for the principal regulated activities where the intermediary concerned provides them n the basis of a fair analysis of the market.  Where this is not the case it must clearly disclose to the consumer, the names of the product producers whose products and services it intends to consider as part of the analysis.

Where the intermediary does not so provide the services, it must disclose to the consumer the names of the product producer whose products and services are intended to consider as part of its analysis.  Where an intermediary is tied to a single product producer for a particular product and service, it must disclose this to the consumer in all communications in relation to that product or service with the consumer.

Prior Disclosure

Prior to offering, recommending, arranging or providing a product, a regulated entity must provide information on paper or in another durable medium to the consumer about the main features and restrictions of the product to assist the consumer in understanding the product.  To the extent that the product is provided under a distance  contract, the relevant regulations apply in place of the requirement set out.

A regulated entity must provide each consumer with the terms and conditions attaching to a product or service in paper or another durable medium before the contract is provided.  Where the distance marketing regulations apply that obligation is substituted.

Prior to offering credit, a regulated entity must explain to the personal customer the effect of missing a scheduled repayment.  The implications and the effect of missing repayments must be highlighted in all credit agreement documents provided to the personal consumer. A warning must be provided in the following terms:

Warning:  If you do not meet the repayments on your credit agreement, your account will go into arrears.  This may affect your credit rating which may limit your ability to access credit in the future.

Credit Disclosures I

Where an application for credit is turned down the reasons for non approval must be outlined to the consumer.  This applies only to a  formal application.  If requested, the information must be provided on paper or another durable medium.

If a regulated entity offers credit on a fixed interest basis to a personal customer with an option to fix or switch to a fixed rate ,it must provide in the credit documentation a worked example of the early redemption charge in monetary terms and details in relation to its calculation.

Where credit is being offered to a personal consumer subject to a guarantee, documentation must outline the obligations of the guarantor.  It must contain a warning in the following terms:

Warning:  As a guarantor of this credit you will have to pay off the debt amount, the interest and all associated charges up to the level of your guarantee if the borrower does not do so. Before you sign this guarantee you should get independent legal advice.

Credit Disclosures

Before offering, recommending, or arranging, or providing a loan to a personal consumer for the purpose of consolidating loans, a regulated entity must provide a personal consumer on paper or other durable medium with an indicative comparison of the total interest rate payable if he  continues with the existing facilities and total interest payable under  the term of the consolidated facilities.  Assumptions used must be reasonable and justifiable and must be clearly stated.

Where a regulated entitle operates  a website, its interest rates for mortgages must be published on the website.

Where  a regulated entity offers a mortgage to a personal consumer it must include in the offer document details as follows:

• Amount of mortgage interest rate that applies at the date of offer term.
• When the interest rate in the offer document may not be the applicable interest rate this must be highlighted.
• Length of time for which the mortgage offer is valid assuming details provided are correct and do not change.

Insurance Disclosures I

An entity providing an insurance quotation must include information in the quotation as follows, assuming all the details provided by the consumer are correct and do not change:

• Amount of quotation,
• length of time for which it is valid,
• full name of the underwriter.

The entity must set out clearly in the quotation provided any warranties or endorsements that apply.  When the quotation is provided on paper or another durable medium, this must be in at least the same sized font as other information.

Where a credit insurance quotation is provided to the consumer, it must show any discounts or loading that have been applied in generating it.

Insurance Disclosures II

When offering a motor insurance policy to a consumer, a regulated entity must set out clearly the basis on which it may calculate the value of the vehicle for the purpose of settling a claim or where it is beyond economic repair following an accident, theft or fire.

The name of the relevant underwriters must be inserted in all insurance documentation and renewal notices issued to the consumer.

A regulated entity must explain to a consumer at the proposal stage the consequences for the consumer a failure to make full disclosure of the relevant facts including medical history and previous insurance claims.  The explanation must indicate that t the policy may be canceled and claims will not be paid, the difficulty thereby incurred in obtaining other insurance and  the effect of failure to have property insurance may have on to terms of loans secured on property.

Prior to completing a proposal form for permanent health insurance, a regulated entity must explain the meaning of disability as defined by the policy, the benefits available, general exclusions and reductions applied where there are disability payments from other sources.

Insurance Disclosures III

Prior to a consumer completing a proposal for a serious illness policy, the entity must explain clearly the restrictions, conditions, and exclusions.

In offering a property or a motor insurance to a consumer a regulated entity must explain where relevant to the consumer that in the event of a claim, it will appoint its own builder or other expert or to undertake restitution work on the property or motor vehicle.

Where an insurance undertaking refuses to quote a customer for property or motor insurance, it must within five days of the refusal, in the case of motor insurance provide the reasons in writing and the right of the consumer to refer the matter to the Declined Cases Committee and the methods of self-doing.

In the case of property insurance, it must inform the reasons for the refusal and notify that failure may jeopardise a secured loan.  It must inform the consumer that they may request the information on paper or a durable medium.

Prior to offering, recommending, arranging and providing an insurance policy with a premium that may be subject to review by the insurance undertaking during the term the regulated entity must explain clearly to the consumer the risk that the premium may increase and provide with him or her with details of the period for which the initial premium is fixed.  A warning must be included in a specified format.

Lifetime Mortgages and Home Reversions Agreements

There are special provisions regarding lifetime mortgages and home reversion agreements.  A lifetime agreement mortgage is one secured on  a home where the interest is rolled up on top of capital and is repaid from the proceeds of the sale of the property.

A home reversion agreement is an agreement between a vendor and a home reversion firm that provides for the conveyance by the vendor to the home reversion firm of an estate or interest in land (which includes the principal residence of the vendor or of the vendor’s dependants) for a discounted sum or an income (or both), and for the vendor to retain the right to live in the residence until the occurrence of one or more events specified in the agreement;

Prior to offering, recommending, arranging or providing a lifetime mortgage to a personal consumer, an entity must inform the personal customer consumer of the consequences of purchasing the product. Certain information must be provided in s written format.  This includes the circumstances where the loan must be repaid, details of interest rate, explanation of the impact of roll-up effect on the existing mortgage, an indication of likely redemption, cost equivalent provisions applied to home reversion agreement.

Assumptions used in the production of the information must be reasonable and justifiable and must be clearly stated.  Before offering such a product an entity must ensure the personal consumer is made aware of the importance of seeking independent legal advice .  Certain warnings must be given in prominent format.  They must be comprised in the application form, other documents and on the entity’s website.

Investment Products Disclosures I

Prior to offering, recommending, or arranging an investment product other  than a tracker bond, a regulated entity must provide the consumer with the following information where relevant:

Capital security.

• The risk with some or all of the investment may be lost.
• Leverage and its effects.
• Limitation on sale or disposal.
• Restriction on access to funds.
• Restrictions on redemption.
• Impact including the cost of exiting the product early
• minimum recommended investment period.
• The risk that the estimated or anticipated turn will not be achieved.
• Potential effects of volatility on price fluctuation in interest rates, movements in the exchange rate.
• Level, nature, and extent in limitations of guarantees and name of the guarantor.

The information must be provided in a stand-alone document except where  provided under, required under the life Insurance provision of information regulations.

A regulated entity must include a warning to the effect that the figures are estimates and are not a reliable guide to future performance of the investment.

Where a prospectus represents the terms of contract this must be clearly stated in the prospectus. This does not apply to the standard company floatation prospectus.

Investment Products Disclosures II

A regulated entity must provide information in a prominent position in a tracker bond brochure and application form:

The following warnings are required in bold, boxed and in prescribed terms

• Where a 100 percent return on maturity is not guaranteed on maturity, a warning to the effect the value of the investment may down as well as up
• Where the promised return is known but is less than 100 percent, that the stated percentage may be lost.
• If the promised return is only applicable on a specified date, that this is so.
• If there were no access to the erm of the product, that this is so
• The nature extent and limitations of guarantees attached must be specified.

A product producer of the tracker bond must produce and issue a key features document as set out in the code.  Where the information is otherwise required under the life insurance provision of information regulations this may be produced in the alternative.

The key features document must be furnished prior to the consumer signing an application for a tracker bond.  Where relevant, the document must explain to the consumer that the return in investment will be capped or limited.

Where lending is offered to invest in the tracker bond the regulated provider must give the consumer an illustration showing

• annual and  total interest payments in respect of borrowed funds equivalent to the compound annual rate of the promised payment or equivalent, if unfixed,
• the equivalent compound annual rate of the payment under the tracker
• the  difference between the promised payment and the total projected outgoings of the consumer both payments of interest and repayments.

Prior to offering, arranging or providing a PRSA, a regulated entity must provide the consumer with the information set out in the appendix to the code.  The declaration set out in the code  must also be completed.

Charges Disclosure I

Prior to providing a product or service to a consumer, a regulated entity must provide a consumer on paper in another durable information with the breakdown of charges including third-party charge as passed to the consumer.  Where such charges cannot be ascertained in advance, it must notify the consumer that the charges will be levied as part of the transaction.

Where a  charge is intended to be imposed in respect of the provision or arrangement of a loan to a personal consumer and it is   proposed the charge be incorporated into the amount advanced the regulated entity must prior to the personal consumer signing an application form for the loan inform the personal consumer on paper or other durable medium that he has the right to pay this charge separately and not in the loan and provide information in relation to the amount of the charge and the overall cost of paying to charge over the term of the loan.

A regulated entity must display in its public offices in a manner that is easily accessible to consumers a schedule of fees and charges imposed by it.  If it has a website its schedule of fees must be made publicly available on its website.

Before offering, recommending or arranging a product or service a mortgage intermediary and an investment intermediary must disclose on paper or another durable medium the existence and  nature of any fee commission or remuneration received or to be received from the product producer in relation to that product or services.  Where the amount cannot be ascertained the method of calculating the amount must be disclosed.  It must be disclosed in a manner which is comprehensive, accurate and understandable.  This does not apply to an insurance policy; is respect of which similar obligations otherwise apply.

Where  remuneration is to be received by the intermediary from a product producer on an ongoing basis, the intermediary must disclose to the consumer on paper or another durable medium prior to the provision of the product or service the nature of the service to be provided in respect of the remuneration.

Charges Disclosure I

Prior to the sale of a non-life insurance product, an insurance intermediary must disclose in general terms to the consumer that it has been paid for the service provided to the consumer by means of a remuneration agreement with the product producer.  It must inform the consumer of the amount of remuneration receivable in respect of the service or that the details of remuneration are available on request.

It must disclose in general terms to a consumer any remuneration arrangements with a  product producer which is not directly attributable to the service provided to an individual consumer, but which are based on the levels of business introduced by the intermediary to that provider or that may be perceived as having the potential to create a conflict of interest.

The above disclosure must be in the terms of business or through some other suitable mechanism and/or with renewal notices.

Where an intermediary allows the consumer the option to pay for its services by means of a fee,  the amount of the fee must be explained in advance to the consumer.  Where a fee is charged and the intermediary also receives a commission in respect of the product and service it must explain to the consumer whether or not the commission will be offset against the fee either in full or in part.