Noel Grealish (Galway West, Independent)
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151. To ask the Minister for Finance the position regarding CP 116; and if he will make a statement on the matter. [42075/19]

Paschal Donohoe (Dublin Central, Fine Gael)
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CP116 as the Deputy is aware relates to the Central Bank of Ireland’s consultation paper on ‘intermediary inducements- enhanced consumer protection measures’ published in November 2017. In keeping with its mandate to protect the consumers of financial services, the Central Bank reviewed potential risks posed to consumers through the existence of commission arrangements between intermediaries and product producers. The Central Bank consulted with various stakeholders including the broker representative bodies. Officials from my Department also engaged with the Central Bank on CP 116 and they and Minister of State D’Arcy met the broker representative groups on a couple of occasions as part of this overall process. However, it is important to note the independence of the Central Bank in carrying out this role.

In line with Section 117 of the Central Bank Act 1989, the Central Bank consulted with me as Minister for Finance prior to amending the code. They then published, on 25 September 2019, new rules to be included in the Consumer Protection Code 2012 on the payment of commission to financial intermediaries involving new requirements on transparency for consumers and prohibitions on certain types of commission arrangements. The Central Bank will be supervising firms’ compliance with these new rules when they come into effect on 31 March 2020.

Under the new rules, the Central Bank will require intermediaries to publish details of the commissions they receive from product producers on their website. In addition, the Central Bank will no longer permit intermediaries to describe themselves and their regulated activities as ‘independent’ where they accept and retain commission in circumstances where advice is provided. The Central Bank is enhancing the conflict of interest provisions- certain criteria must be met in order for commission to be acceptable and commission linked to targets that do not consider a consumer’s best interests, and soft commission will no longer be permitted

In conclusion, you should note that I support these changes, which should increase transparency in the commission and inducements arrangements of intermediaries and result in a more level playing field between industry and consumers.

For further information please see the Central Bank’s website which has a press release and further information on the new rules for intermediaries.