diff --git a/doc/source/whatsnew/v1.2.1.rst b/doc/source/whatsnew/v1.2.1.rst
index 5695c817b5a3a..baeca87b8c4f8 100644
--- a/doc/source/whatsnew/v1.2.1.rst
+++ b/doc/source/whatsnew/v1.2.1.rst
@@ -24,6 +24,7 @@ Fixed regressions
 - Fixed regression in :func:`read_excel` with non-rawbyte file handles (:issue:`38788`)
 - Bug in :meth:`read_csv` with ``float_precision="high"`` caused segfault or wrong parsing of long exponent strings. This resulted in a regression in some cases as the default for ``float_precision`` was changed in pandas 1.2.0 (:issue:`38753`)
 - Fixed regression in :meth:`Rolling.skew` and :meth:`Rolling.kurt` modifying the object inplace (:issue:`38908`)
+- Fixed regression in :meth:`read_csv` and other read functions were the encoding error policy (``errors``) did not default to ``"replace"`` when no encoding was specified (:issue:`38989`)
 
 .. ---------------------------------------------------------------------------
 
diff --git a/pandas/io/common.py b/pandas/io/common.py
index 642684ca61480..8f04724773a8a 100644
--- a/pandas/io/common.py
+++ b/pandas/io/common.py
@@ -553,8 +553,7 @@ def get_handle(
     Returns the dataclass IOHandles
     """
     # Windows does not default to utf-8. Set to utf-8 for a consistent behavior
-    if encoding is None:
-        encoding = "utf-8"
+    encoding_passed, encoding = encoding, encoding or "utf-8"
 
     # read_csv does not know whether the buffer is opened in binary/text mode
     if _is_binary_mode(path_or_buf, mode) and "b" not in mode:
@@ -641,6 +640,9 @@ def get_handle(
         # Check whether the filename is to be opened in binary mode.
         # Binary mode does not support 'encoding' and 'newline'.
         if ioargs.encoding and "b" not in ioargs.mode:
+            if errors is None and encoding_passed is None:
+                # ignore errors when no encoding is specified
+                errors = "replace"
             # Encoding
             handle = open(
                 handle,
diff --git a/pandas/tests/io/test_common.py b/pandas/tests/io/test_common.py
index d445bece593d1..725c14f410357 100644
--- a/pandas/tests/io/test_common.py
+++ b/pandas/tests/io/test_common.py
@@ -419,3 +419,11 @@ def test_is_fsspec_url():
     assert not icom.is_fsspec_url("random:pandas/somethingelse.com")
     assert not icom.is_fsspec_url("/local/path")
     assert not icom.is_fsspec_url("relative/local/path")
+
+
+def test_default_errors():
+    # GH 38989
+    with tm.ensure_clean() as path:
+        file = Path(path)
+        file.write_bytes(b"\xe4\na\n1")
+        tm.assert_frame_equal(pd.read_csv(file, skiprows=[0]), pd.DataFrame({"a": [1]}))