Central Bank of Ireland Investigations

Dáil Éireann Debate, Tuesday - 27 March 2018

Tuesday, 27 March 2018

Ceisteanna (60)

Michael McGrath

Ceist:

60. Deputy Michael McGrath asked the Minister for Finance the status of a case involving companies (details supplied); the steps the Central Bank is taking to ensure that the complaints process is fair and independent for the businesses involved and that redress and compensation schemes are adequate; the details of the contact between the Central Bank and the Financial Conduct Authority in the UK; and if he will make a statement on the matter. [14184/18]

Freagraí ó Béal (6 píosaí cainte)

Deputy Michael McGrath

As the Minister is aware, the report from the Financial Conduct Authority, FCA, in the UK into Royal Bank Of Scotland's Global Restructuring Group, GRG, has been published. GRG also operated in Ireland under the guise of Ulster Bank. Its treatment of many SMEs has been a source of considerable controversy. I will go into the report in a moment, but the purpose of my question is to establish what is being done in Ireland with regard to this issue.

Deputy Paschal Donohoe

As the Deputy is aware, the Central Bank of Ireland is responsible for the regulation of the financial services sector. I can confirm that while the Central Bank cannot generally comment on interactions with regulated firms, Ulster Bank Ireland is engaging with the Central Bank in regard to Global Restructuring Group. In November 2016, Royal Bank of Scotland announced a complaints process for SME customers in Ulster Bank’s Global Restructuring Group and indicated publically that a "customer is in-scope for the new complaints process if they were a small or medium sized enterprise under the control of Global Restructuring Group in the United Kingdom or Republic of Ireland between 1 January 2008 and 31 December 2013".

In line with its risk-based supervisory approach, the Central Bank has been and continues to monitor all relevant issues as they arise from a system perspective. The Central Bank will continue to monitor this matter and is overseeing complaints received for any issues arising, particularly in the context of SME regulations compliance. The protection of SME customers is a priority for the Central Bank. The Central Bank’s SME regulations provide key protections to SME customers, including those on handling complaints and managing arrears and financial difficulties. The Central Bank also continues to engage with the UK FCA on this matter. I am confident that the Central Bank will act as appropriate on this matter and that it possesses the necessary tools to do so if required.

Deputy Michael McGrath

The report that was published makes for quite remarkable reading. For example, it identified certain widespread inappropriate treatment of SME customers, which should also be considered to be symptomatic. There is no reason to believe that similar treatment of SMEs in Ireland did not take place. One striking element of the report is contained in annexe 4, which reproduces a document produced by a GRG team leader that was widely circulated in at least one regional office in the UK. One of the tips stated, "Rope: Sometimes you need to let customers hang themselves. You have then gained their trust and they know what's coming when they fail to deliver". A second tip told those involved to "Be specific: avoid round number fees - £5,300 sounds as if you have thought about it, £5K sounds like you haven't." When I hear stories from SMEs, there is a common thread as to how they were treated. We need specific answers as to what is being done in Ireland.

Deputy Paschal Donohoe

I am aware of the report to which the Deputy has referred. I have outlined the fact that while I cannot ever go into details regarding the work of the Cental Bank and its interaction with regulated firms, this is a matter on which Ulster Bank and the Central Bank are now engaging. When I met representatives of Ulster Bank and its parent group, Royal Bank of Scotland, I indicated to them that they must comply with the work which is under way with the Central Bank. They understand that. When I have engaged with the Central Bank on this matter, it has indicated to me that it is dealing with the matter. At this point I cannot go any further than that because I have to respect the role of the Central Bank regarding this matter.

Deputy Michael McGrath

I respect the role of the Central Bank but we also have a duty to request information and advocate for SMEs, which believe they were essentially put into a graveyard when they were put into GRG. More than 2,000 businesses went into it but fewer than 100 came out alive. For some time, we have heard that the Central Bank is engaging with Ulster Bank. I still do not really know what that means. I welcome that the Central Bank has had contact with the FCA in the UK, but I would like the Minister to confirm whether the Central Bank has initiated an investigation. Will there be a report? Will something be produced as an outcome to this issue in regard to the Central Bank's consideration of it? The SMEs involved, which believe they were treated very badly, and the many businesses which closed, resulting in job losses, deserve the truth.

Deputy Paschal Donohoe

I appreciate and acknowledge that the Deputy respects the role of the Central Bank, and the work it does and is carrying out on a number of matters in respect of the Irish banking system. I am aware, as I indicated to the Deputy a moment ago, of the report he used to provide a backdrop to the question he put to me. At this stage, I can confirm that the Central Bank is engaged on this matter. It is up to it to decide if it wants to go a stage further. It will then communicate this in a way which befits its role as an independent regulator of our banking system. I am confident that the Central Bank will act appropriately and effectively with regard to this matter if it is deemed it is necessary to do so, and that it has the necessary tools and powers to do so.