Dáil Éireann Debate, Thursday - 28 April 2022
18. Deputy Darren O'Rourke asked the Minister for Finance his views on the current status of the withdrawal of banks (details supplied) from the Irish market and the closure of accounts and migration of their customers to receiving banks; if he has raised concerns with the banks with respect to their preparedness for this process; and if he will make a statement on the matter. [21436/22]
Amharc ar fhreagraI want to ask the Minister his views on the current status of the withdrawal of KBC Bank and Ulster Bank from the Irish market, on the closure of accounts and migration of their customers to receiving banks, if he has raised concerns with the banks with respect to their preparedness for this process and if he will make a statement on the matter.
I thank the Deputy for raising this question. It is a matter that is relevant for many people. While it is regrettable that Ulster Bank and KBC Bank have decided to exit the Irish market, the Deputy will understand that the Minister for Finance does not have a role in relation to the commercial decisions of the banks. The Minister's priority is to ensure each bank withdraws from the market in an orderly manner. That word - "orderly" - is the most important one I will use here in this context. It must be done in an orderly manner. Ulster Bank has commenced issuing letters on a phased basis. KBC Bank is doing so as well. It is important that this happens in an orderly manner.
The Central Bank has a consumer protection role in relation to this matter and I believe it is watching this clearly. Not long ago, it issued a report on how long it was taking the main banks to answer their phones - people could not get through when they were ringing - and that was a forerunner to what it could see as a problem that can happen. If one cannot get through on the phone, how does one get to make an appointment to open a bank account? The fact that the Central Bank issued this report a while ago shows that it is alert to the situation. It is watching it carefully. The Central Bank is briefing the Department of Finance on a monthly basis. I stress that all these regulatory matters are matters for the Central Bank, and the Department of Finance does not have a direct role. The Central Bank is independent of the Government and the Minister cannot direct the banks which are leaving.
NatWest, which is selling Ulster Bank, is taking a share in Permanent TSB and that group will continue to have a presence in Ireland. That will be a further reason to ensure everything is done in an orderly manner.
In recent days, Ms Derville Rowland from the Central Bank has written directly to all the major banks and the 20 main direct debit instigators and companies to make sure all of them work together. I understand that Ms Rowland is asking for detailed responses from each of them in relation to preparedness and that a meeting is scheduled in the next couple of weeks directly with each of them.
The Minister of State has said that there is a wish that this proceeds in an orderly manner, but there must be concern at this stage that this will not happen and it will not be orderly. In fact, there are approximately 900,000 customers affected. I am sure every one of us knows from being contacted by those affected what their experiences have been. They talk about being put off, not being able to get through and not getting the type of support they want. They talk about their concern and what the future holds for them and for their accounts. We saw the measure - it was reported yesterday - that the Central Bank took, but I believe there is a role for the Minister to intervene and to ensure this process proceeds and there is an adequate response from the banks involved because people are deeply concerned that the process will not be orderly.
The letter issued by the Central Bank to the organisations I mentioned in passing seeks to reinforce and, to any extent necessary, clarify the application of the expectations of the Central Bank's previous letter of June 2021 and to invite the CEOs to a round-table meeting hosted by the director general of financial conduct affairs, Ms Derville Rowland. The following are the key issues and risks that have been identified: the notice period for people in relation to the closure of accounts; the application of the switching process; the new provider making commercial decisions in a manner that facilitates the customer making and executing a switch; direct debit originators; and vulnerable customers will have to be looked at. These are all the issues that will be uppermost in the meeting with the Central Bank to ensure this is done on an orderly basis. The Department of Finance and the Minister are not directly involved in these issues, but they are being kept fully apprised of them because they are conscious of them. The final message I would give to anyone who gets a letter from either bank is that they should respond as soon as they get the letter and should not put it to one side. If they respond, the process can go better than if they ignore the letter.
If past performance is any indication of future performance, we are right to be concerned here. It is important, rather than expecting that the matter will proceed smoothly, that measures are taken to ensure they proceed smoothly. This train has been rolling down the track and the time is getting shorter. On the commitment in terms of notification periods, continuity of service and protection of vulnerable customers, I am not convinced that the supports, the communications systems and the contact facilities are there. There are real concerns, particularly for people who are used to using their local retail bank and are not familiar or comfortable with online services. We saw it yesterday in the media with customers outlining their experience and frustration to date. Something needs to be done to address it.
The writing is on the wall here. We can all see it. That is why I have asked the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to carry out a piece of work on this. We have issued detailed questionnaires to all the banks. All of them have responded, bar KBC Bank, but we will get its response soon, and we have engaged with the Central Bank on this. There will be a big, big problem here. There are 1 million accounts being closed over the next short period. The banks that are closing just want out. The receiving banks are not ready. They are not up for it. It is not only a matter of answering phones. People who have overdrafts must go into branches. Branches have been closed. Their staff have not been beefed up. There are serious problems coming down the line. There are vulnerable customers. There are direct debits. There are mortgages that will fail. All of this is happening.
I must take issue with the Minister of State's point that there is no role here for the Department of Finance.
The Minister for Finance, on behalf of the Irish State, is the majority shareholder in AIB. He is the major shareholder in Bank of Ireland. He is the majority shareholder in Permanent TSB. These are the three banks that are going to receive the 1 million customers. That is where the problem is. The infrastructure is not there to do this in an orderly timeframe. The Minister needs to intervene. He needs to call in the CEOs to complement the work that is being done by the Central Bank from a regulatory point of view.
I understand what the Deputies opposite are saying. As I said earlier, there are regular meetings with the Department of Finance about this process. I spoke to Ms Derville Rowland on the matter just a fortnight ago. Everybody in the Department and at the Central Bank, which will be at the forefront of facing these issues in conjunction with the banks, understands the issue. Banking & Payments Federation Ireland is currently sourcing a provider for a media campaign to inform customers on the actions required to move their current accounts if they currently hold an account with either Ulster Bank or KBC Bank. It is keeping the Department informed regarding the campaign and other matters at monthly meetings with the Department. A number of these meetings are taking place on an ongoing basis. A media campaign is going to be necessary and when people get the relevant letters, I ask them to respond so the switchover can be done on an orderly basis. I stress that the overriding point is that this situation will be solved in an orderly manner.
I am going to move through the questions. I am not sure if the Minister of State has the relevant replies with him but we are now moving on to Question No. 58.
