Protection of consumers of financial services
If you have a bank account or a loan with a financial institution, you are a consumer of financial services. As a consumer of a financial service you have certain rights. As in other areas of consumer law, your rights as a consumer of financial services depend on the contract between you and the financial institution. A contract is an agreement between two or more people that is enforceable by law. As with all contracts, your contract with the financial institution consists of stated terms and implied terms. Under the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 and subsequent amendments in 2000 any term that is found to be unfair to the consumer cannot be enforced.
From June 2010 the Consumer Credit Directive (2008/48/EC) establishes common rules on consumer credit aimed at harmonising certain aspects of the laws, regulations and administrative provisions on consumer credit in the EU. The Directive covers personal loans of between €200 and €75,000 repayable after more than a month. The Directive does not apply to mortgages or to deferred debit cards. You can find further information on the EU's Europa website.
Legislation exists that regulates financial institutions dealings with consumers such as the Consumer Credit Act 1995. A Consumer Protection Code for financial institutions also exists that prescribes how a financial institution deals with consumers. The Central Bank of Ireland is the body that enforces this code and this legislation.
In order to enforce your rights you need to be aware of what those rights are. The Competition and Consumer Protection Commission (CCPC) provides information to consumers on their rights and on the costs, risks and benefits of different financial products. This information also helps you to access the financial services that are most suitable to you. The CCPC maintains financial information on its website for consumers.
Protection for your savings and investments
The Central Bank is responsible for the regulation of the following firms:
- Building societies
- Insurance companies
- Investment management firms
- Insurance and investment intermediaries (brokers and agents)
- Mortgage intermediaries (brokers)
- Collective investment schemes
- Credit unions
- Bureaux de change
- Other retail credit firms
- Home reversion firms
Before dealing with any of these firms, check that they are authorised to trade by the Central Bank. This authorisation protects you from unscrupulous traders. To check whether the company you are dealing with is authorised, contact the Registers Department of the Central Bank (see 'Where to apply' below).
There are a number of compensation schemes.
The Deposit Guarantee Scheme compensates consumers for money lost from current and deposit accounts where a bank, building or credit union is unable to return their money due to financial difficulties. The European Communities (Deposit Guarantee Schemes) Regulations 2015 replaces the European Communities (Deposit Guarantee Schemes) Regulations 1995 establishing the Scheme.
The payment process is only initiated once it has been established that the institution cannot return payments made to it due to its financial condition. The maximum claim per person is 100% of all deposits held by the financial institution up to a maximum of €100,000.
The Deposit Guarantee Scheme is funded by authorised credit institutions. The compensation scheme of another EU country applies in the case of a bank or financial institution authorised and regulated in another EU state but operating here on a branch basis under EU rules, unless the branch has confirmed to the Central Bank its intention to participate in the Deposit Guarantee Scheme.
More detailed information on the Deposit Guarantee Scheme is available from the Central Bank of Ireland. Information on relevant schemes from other EU countries is available on the Competition and Consumer Protection Commission's (CCPC) website.
On 30 September 2008 the Government introduced an unlimited Government guarantee for all deposits exceeding €100,000, among other things, in certain Irish banks. The scheme known as the Credit Institutions Financial Support Scheme (CIFS) expired on 29 September 2010.
In December 2009 the Government introduced the Eligible Liabilities Guarantee Scheme (ELG) for term deposit accounts exceeding €100,000 in the same Irish banks. The scheme covered term deposits until they matured (up to a maximum five years), provided the bank was covered by the scheme when the deposit was placed. If the bank became a member of the scheme after the deposit was placed, the deposit was covered by the CIFS Scheme until 29 September 2010.
The ELG scheme also covered on demand current and deposit accounts exceeding €100,000, regardless of when the deposit was placed. Notice accounts were similarly covered provided notice of withdrawl was made before the scheme ended.
The banks covered by the two schemes were:
- Allied Irish Bank
- Bank of Ireland
- Irish Life and Permanent
- Educational Building Society
- ICS Building Society
The ELG scheme ended on 28 March 2013. If you had a fixed term deposit covered by the scheme before 28 March 2013, the protection of the scheme remains in place until the end of the term, up to a maximum of five years. This does not affect deposits up to €100,000 which continue to be covered by the Deposit Protection Scheme.
Further information on the ELG scheme is available on the CCPC's consumer website.
Some banks that operate in Ireland are regulated in their home country. If you have an account in such a bank, you would usually make a claim under the compensation schemes that are in place in the country where the institution is regulated.
The Investor Compensation Company Ltd (ICCL) operates the Investor Compensation Scheme. The ICCL was set up under the Investor Compensation Act 1998. The purpose of the Scheme is to compensate clients of failed authorised investment firms. If a member firm of the Scheme goes out of business and cannot return your investments or money, you may be entitled to make a claim under the scheme. The maximum claim per person is 90% of all deposits held by the financial institution up to a maximum of €20,000.
Further information on the Investor Compensation Scheme is available on the ICCL website.
As a consumer, you should protect your rights and avoid dealing with unregulated financial service providers.
Who is involved in regulation?
The Central Bank of Ireland
The arrangements for the regulation of the financial services sector have changed considerably in recent years with the most recent changes, implemented under the Central Bank Reform Act 2010, making the Central Bank of Ireland responsible for regulation. The Central Bank’s Consumer Director has specific responsibility for
- The protection of consumers and/or investors under a range of legislation including the Consumer Credit Act 1995, the Investment Intermediaries Act 1995, the Stock Exchange Act 1995, the Central Bank Act 1989 and the Insurance Act 1989.
- Monitoring the provision of financial services to consumers.
Registrar of Credit Unions
The Central Bank appoints the Registrar of Credit Unions who regulates credit unions. The Registrar is required to inform and assist the Consumer Director in the Central Bank in relation to any complaint about a credit union.
Financial Services and Pensions Ombudsman
The Financial Services and Pensions Ombudsman is as an independent mediator dealing with individual complaints against financial services firms. Complaints must first be made to the financial institution concerned and then to the Ombudsman if you are still dissatisfied. The Ombudsman provides a mediated solution. The Ombudsman has the power to order financial institutions to do certain things and to pay compensation. Their decisions will generally be binding on the financial institutions (subject to the right of appeal to the High Court). Read more about the Financial Services and Pensions Ombudsman's office here.
Competition and Consumer Protection Commission
The Competition and Consumer Protection Commission has statutory responsibility for the regulation of pawnbrokers and credit intermediaries (for example garages that offer finance on new or used cars). The office also monitors and investigates complaints in relation to the advertising of credit by credit intermediaries.
FIN-NET is an EU-wide out-of-court complaints network for financial services. It has been designed particularly to facilitate the out-of-court resolution of consumer disputes when the service provider is established in an EU Member State other than that where the consumer lives.
Financial fraud has risen in the past few years as criminals seek ways to access personal financial details.
Personal financial details include your:
- Bank account number,
- Personal identity numbers (PIN) ,
- Credit card details
- Debit card details
- ATM card details
- Phone and internet banking details
It is very important that you disclose your personal financial details only to reputable traders.
Criminals have been known to access your personal financial details by impersonating your bank. Beware of unsolicited letters, e-mails and telephone calls you receive asking you to confirm your personal financial details. If you receive a letter stating that you have won money from a company that you have never heard of before they may be looking for bank account details.
Never write your personal identity number (PIN) down. In particular, do not keep this number with your bankcards - memorise it. Never disclose your PIN to anyone - your PIN is personal information that your bank would never ask you to state. Your bank may ask you to input your pin to your phone or a PIN terminal at your bank branch or ATM. If you have difficulty memorising your PIN you can change it to a number that you can remember. Avoid memorising a number that a criminal might be able to guess - such as a birthday. Changing your PIN is easy to do at an Automatic Teller Machine (ATM) or at the bank counter.
Report any lost or stolen cards as soon as you notice them missing. If you don’t you may be liable for purchases made fraudulently on your card.
The best way to protect yourself from fraud is to keep your cards and personal financial details secure.
In the case of credit cards, a new service - chip and PIN - has been introduced to make credit cards more secure. If you have a chip and PIN facility on your card (a gold coloured computer chip will be visible on your card) you type in a PIN into the retailers machine instead of signing dockets. Never use your credit card PIN or other PIN on the internet or over the phone.
A frequent financial services scam is where sales persons use high-pressure sales tactics over the telephone, by mail or in person. These scams are called ‘boiler rooms operations’ where the sales person put you under pressure to buy worthless or high-risk shares, foreign currency or other investments. If you are offered an investment deal, check if the financial institution is authorised by the Central Bank by phoning Lo-Call 1890 777 777.
Particular laws exist to protect you if you are buying products and services by distance selling. There are also laws that deal with unsolicited commercial email which can help to ensure that your personal details remain private.
Where to apply