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Central Bank of Ireland

Dáil Éireann Debate, Tuesday - 30 January 2018

Tuesday, 30 January 2018

Ceisteanna (150)

Joan Burton

Ceist:

150. Deputy Joan Burton asked the Minister for Finance his plans to bring forward legislation to ensure stronger protection for customers of banks and punishment for bankers misleading and lying to their customers; and if he will make a statement on the matter. [4156/18]

Amharc ar fhreagra

Freagraí scríofa

On a number of occasions recently I have made clear that I will consider any proposals from the Central Bank for additional powers, should it request them. Notwithstanding that, the Central Bank already has considerable powers to protect customers of financial institutions and punish regulated entities which mislead or lie to their customers.

The Central Bank’s Consumer Protection Code provides that

“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it:

2.1 acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market;

2.2 acts with due skill, care and diligence in the best interests of its customers;

2.3 does not recklessly, negligently or deliberately mislead a customer as to the real or perceived advantages or disadvantages of any product or service…”

The Central Bank can impose sanctions on regulated entities which breach this Code.

I should point out that the Code also provides that “A regulated entity must have written procedures in place for the effective handling of errors which affect consumers.” The Code also specifies the procedures to be followed in the event of a complaint.

When the complaint is finalised, the Code requires that the consumer be informed that they can refer the matter to the Financial Service and Pensions Ombudsman.  If a consumer is not satisfied with the outcome of a complaint, I would strongly advise them to pursue a complaint with the Financial Services and Pensions Ombudsman.

As I announced in December, I propose to increase the compensation amount which may be awarded by the Ombudsman to €500,000 in order to ensure the Ombudsman can fully compensate those most severely impacted by the appalling behaviour of the banks.  Such a large increase in the compensation payments capability of the Financial Services Ombudsman will also serve as a clear indication to the banks that unacceptable behaviour towards customers will not be tolerated and that when it happens, they will have to compensate customers appropriately.

The Tracker Mortgage Examination highlighted that significant cultural issues and challenges remain in some of the retail banks and that customer interests have not been sufficiently protected or prioritised. Section 6A of the Central Bank Act, 1942, as amended, provides that I, as Minister, may consult with the Governor of the Central Bank in relation to our respective functions. To this end, I wrote to the Governor on last November, requesting that the Central Bank undertake an assessment of the current cultures and behaviours and associated risks in Irish retail banks, and the actions that may be taken to ensure that banks prioritise customer interests in the future.

Work on this report is underway, and is due to be finalised by end-June 2018. The findings of the report will determine whether any additional legislative or regulatory changes are required to enhance accountability in the banks and ensure the safeguarding and prioritisation of consumer interests.

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