The Central Bank of Ireland says it has no intention of delaying the introduction of a ban on differential pricing within the insurance industry despite calls for a six- to nine-month lead-in period.
The regulator announced last year that it planned to ban the practice whereby home and motor insurance companies impose so-called loyalty penalties on long-standing customers, also known as price walking.
This followed a Central Bank investigation, which discovered the practice was widespread in Ireland.
In an address to the Compliance Institute, the Central Bank's director of financial regulation, Gerry Cross, said it would be sticking to its plan of introducing a ban from July of this year.
Such behaviour took “undue advantage of customers’ behaviours” and was unacceptable and there was an urgent need for it to be tackled, he said.
"Counter to what might be the legitimate expectation of a customer that by proving themselves to be a good customer, a loyal customer, their premiums would reduce taking due account of their overall riskiness, in fact the reverse has been happening," Mr Cross said.
Regulations
“Insurers have noted this loyalty and taken covert advantage of it to charge the customer more on renewal,” he said. Mr Cross described comments made in a public consultation on the issue as “largely supportive” of the ban but added that there had been requests for the implementation date to be extended by six or nine months.
“It is important to state that in the context of our proposed prohibition on price walking we have identified behaviour which is inconsistent with the interests of firms’ customers. It goes against their interests. It is a practice which firms should not be engaged in,” he said.
Final draft regulations on the measure are to be published in March.
The regulator, Mr Cross said, has also been working on the regulations and guidance for a new framework for individual accountability in financial firms.
This comes in the wake of the Davy bond-trading scandal, which resulted in the State’s largest broker being fined €4.1 million.
The Central Bank imposed the fine on the broker in relation to a bond trade where a group of 16 of its staff, including top executives, sought to profit personally by taking the opposite side of a trade with a client in 2014 – and failing to tell either the client or its own compliance officials.
Mr Cross also signalled that the regulator would be publishing a discussion paper later this year on a review of the Consumer Protection Code, which was introduced 15 years ago.
