Supervision Process

General

The supervision process for debt management firms is designed to monitor the effectiveness of the measures adopted by such businesses to comply with the on-going requirements set out in the Authorisation Process and Conduct of Business Requirements applying to debt management firms. 

Governance and Systems

Debt management firms must have appropriate corporate governance in place.  Systems and controls must also be in place to mitigate risk and to monitor compliance with internal policies.

Fitness & Probity

A sound and effective fit and proper test is a critical component of the regulatory regime.  To ensure the proper discharge of their responsibilities, it is important that directors and senior managers have the skills to manage a firm.

“Fitness” requires that a person appointed as a director or senior manager has the necessary qualifications, skills and experience to perform the duties of that position.  “Probity” requires that a person is honest, fair and ethical.

An Individual Questionnaire ('IQ') should be completed in respect of each director and senior manager. Please note that the Central Bank's Fitness and Probity regime came into effect on 1 December 2011. For further information on the process, please follow the following link.

Consumer Protection

Debt management firms are required to comply with the relevant provisions of the Central Bank's Consumer Protection Code, 2012 (''the Code'').  Provisions will apply where relevant to the activity of debt management and will include the General Principles of the 2012 Code and provisions relating to the following:

  • Conflicts of interest
  • Personal visits and contact with consumers
  • Provision of information
  • Advertising
  • Errors and complaints resolution
  • Records and compliance

At the time the Code was implemented in 2012, debt management services were not regulated by the Central Bank.  Therefore, there were a number of areas where additional sector specific requirements for debt management firms was needed, arising from actual or potential consumer detriment associated with this particular sector, a consultation was undertaken.

On 20 November 2014, a revised Code was published which contained additional consumer protection requirements for debt management firms, including:

  • A ban on paying for client referrals or client leads.
  • A ban on arranging credit for consumers for the purposes of paying their fees or charges for providing debt management services.
  • A ban on preventing clients from directly dealing with creditors.  A debt management firm must not prevent or obstruct their consumers from communicating directly with their creditors if they wish to do so.  A debt management firm must also provide consumers with an ''Information to be Provided to Consumers'' document, which includes details on what happens and how any outstanding charges are dealt with, if a consumer stops using the firm at any stage.
  • Consumer agreement on charges.  A debt management firm can only charge after the consumer has signed an agreement which clearly specifies the charges payable for the service, when they must be paid and the services that will be provided for those charges.
  • Financial assessments: Firms must consider the full range of debt solutions available to and suitable for the consumer, based on their personal circumstances.
  • Provision of statement of advice:  This must include an explanation of the options available to the consumer, how these options work and a description of the consequences for the consumer of accepting such options.  After this is provided to a consumer (before the debt management firm undertakes any of the actions advised), the consumer must be given at least five business days to consider the advice.
  • Negotiation updates and consumer consent to agreement:  The firm must notify the consumer of the outcome of the negotiations within 3 business days of negotiations and the firm must have the consumer's consent before agreeing a negotiated outcome.
  • Provision of information about debt management services:  A standard information template must be provided upfront to the consumer about 'What you should Know about Debt Management Services'.  In addition, firms are required to signpost consumers to the availability of free debt advice.

The additional requirements are contained in Chapter 13 of the Code, together with a template of information to be provided to a consumer (Appendix D) and the Standard Financial Statement (SFS) (Appendix E) which must be used by debt management firms from 1 January 2015.  These requirements supplement the existing Code requirements that apply to debt management firms.

An information booklet for consumers explaining these consumer protections has also been published and is available here.

On-going Prudential Requirements

  • A debt management firm is required to consult with the Central Bank prior to engaging in any new activities or making any amendments to existing activities.
  • A debt management firm must obtain the prior approval of the Central Bank in respect of any proposed change of name.
  • The prior approval of the Central Bank must be sought in respect of any proposed material change of ownership of the debt management firm i.e. proposed changes in direct and indirect qualifying shareholders.
  • A debt management firm must receive the prior approval of the Central Bank before operating from another place of business other than its head office.  Such other place of business may be located within the State only.
  • A debt management firm must notify the Central Bank, at least 14 days in advance, of the proposed closure of another place of business and the reason for such closure.
  • A debt management firm shall notify the Central Bank in advance where it proposes to outsource any important operational function relating to the provision of debt management services.

    Revocation of Authorisation

    If a firm decides that it no longer wishes to act as a debt management firm it must formally request the revocation of its authorisation from the Central Bank.  The request for revocation of authorisation should clearly set out the rationale for seeking that revocation and must include a plan for the orderly wind-down of the business.  The relevant revocation form is available under the Forms page.

    Supervisory Process

    Our supervisory process is carried out by a number of different approaches some of which would include:

    • Analysis of various returns submitted to the Central Bank
    • Conduct of inspections (may be overview, general or themed)
    • Mystery shopping exercises
    • Advertising monitoring
    • Risk-rating of firms
    • Regular correspondence and engagement with firms under our supervision