Your rights when you buy a financial product
What is a financial product?
When you open a bank account, take out a loan or sign up to other financial services, you are making a contract with the financial services company.
Just like other consumer contracts, there are certain parts of the contract that the company can set. However, these terms and conditions must not go against your consumer rights and they must not be unfair.
Financial services companies must deal with you in a fair, clear, and professional way.
The Central Bank of Ireland (Central Bank) regulates financial services providers in Ireland.
Who can sell financial products in Ireland?
A financial product can include a buying shares in a company, opening a bank account, getting a loan or credit care or other financial service.
You should only deal with regulated financial service providers when you buy financial products and services.
Regulated financial service providers are companies or individuals who are either:
- Authorised by the Central Bank
- Authorised in another EU member state to provide products and services to consumers in Ireland
Authorisation means that the company has a licence to provide financial services in Ireland. The Central Bank monitors which companies and individuals can enter the financial markets, making sure they meet certain standards before they are authorised to provide products or services to consumers.
|Type of financial service company||Type of financial products or service they offer|
|Banks||Bank accounts, loans, overdrafts, savings, mortgages, deposits, credit cards, investments, insurance|
|Insurance companies||Life insurance, pensions and general insurance (car, home, travel, pet) policies|
|Investment management firms||Stocks, bonds, mutual funds|
|Insurance and investment intermediaries (brokers and agents)||Advice and arrange products from insurance and investment companies|
|Mortgage intermediaries (brokers)||Advice and arrange mortgage products from lenders|
|Stockbrokers||Buy and sell stocks and other securities|
|Collective investment schemes||An investment company, fund or trust used for collective investment by investors|
|Credit unions||Bank accounts, savings, loans, overdrafts, mortgages|
|Moneylenders||Short-term, high-cost loans|
|Bureaux de change||Buy and sell foreign currency|
|Other retail credit firms||Cash loans or indirect loans including hire purchase, personal contract plan and consumer hire agreements|
|Credit servicing firms||Servicing loans that are sold on by a lender. Servicing includes collecting repayments, dealing with complaints and helping if you are in financial difficulty|
|Debt management firms||Charge you to provide debt management services (assesigng your financial situation, giving advice to resolve your debt, negotiating with your creditors)|
|Home reversion firms||Cash loans for a share of your home (home equity release)|
To make sure the company you are dealing with is authorised by the Central Bank, you should check the register of authorised financial service providers.
Rules that financial services companies must follow
There are rules in place to protect you when you are buying financial products and services. These rules come from EU and Irish legislation and codes of conduct developed by the Central Bank.
Prudential rules make sure companies are financially sound and safely managed. Financial services companies must manage risk and hold enough capital (or cash reserves) for its business needs. This is a basic level of protection for consumers.
Conduct of business rules
Financial services companies must follow conduct of business rules that make sure you are treated fairly when you buy a financial product or service.
- Act honestly, fairly and professionally
- Act in your best interest when providing products or services
- Give you the information you need to make informed decisions
- Correct errors and address any complaint you have speedily, efficiently and fairly
The general conduct of business rules are set out in the Consumer Protection Code.
There are specific codes and legislation covering:
How the Central Bank enforces the rules
The Central Bank can take action against companies that do not follow its rules.
The Central Bank investigates and sanctions (punishes) regulated financial services companies and individuals when they breach (break) the law.
For financial services companies, the sanctions can include:
- A caution or reprimand
- Having their licence suspended or revoked (taken away)
- A fine of up to €10 million or 10% of company’s turnover
An individual person can be sanctioned by a:
- Caution or reprimand
- Disqualification from managing a regulated financial services company
- Fine of up to €1 million
The Central Bank has an explainer on its enforcement powers.
If a company goes out of business
There are compensation schemes that protect you if you lose money because a financial services company has gone out of business.
The three compensation schemes are summarised below.
|Name of scheme||What it covers||Maximum you can claim||More information or apply|
|Deposit Guarantee Scheme (DGS||Compensates you for money lost from a current or deposit account where a bank, building society or credit union can’t pay back your savings due to financial difficulties.||€100,000 per person, per institution.||How to apply for the Deposit Guarantee Scheme.|
|Insurance Compensation Fund (ICF)||
Compensates you when an investment firm authorised by the Central Bank goes out of business and can’t repay money that you invested.
These firms include stockbrokers, investment manager, insurance brokers and agents.
|90% of all deposits held by the firm. This is per person and up to a maximum of €20,000.||The ICS is run by the Investor Compensation Company Ltd (ICCL).|
|Insurance Compensation Fund (ICF)||Compensates you when non-life (also known as general) insurance companies go into liquidation and can’t pay insurance claims.
This covers general insurance policies such as car or home insurance and excludes life or health insurance.
|65% of the cost of the insurance claim or €825,000, whichever is lower.||Read more detailed information about the Insurance Compensation Fund (pdf).|
The Central Bank has more information about compensation schemes.
How to make a complaint
If you have a complaint about a financial services company you can follow this process:
- Make a complaint to the person in the company who you normally deal with.
- If you are not satisfied with the response, you should put your complaint in writing to the company. Check their website for where to send your complaint.
- If you are still not happy, you can take your complaint to the Financial Services and Pensions Ombudsman.
Read more about how to complain about a financial product or service.
To learn more about all of the Central Bank’s function, you can watch this video on the Central Bank.
You can read more about what is financial regulation and why does it matter?.
You can get information about a wide range of financial products and services from the Competition and Consumer Protection Commission.