The Central Bank’s Director of Consumer Protection has said he thinks banks here “are not yet where they need to be” in preparing for Ulster Bank and KBC’s exit from the Irish market.
Colm Kincaid also said the Central Bank has an “appetite to intervene” where it considers necessary to do so if it is not satisfied with the progress being made in protecting customers as the two banks begin the process of exiting.
“We are very actively engaged now with each of the five banks – their CEOs down into their management teams – on their plans and resources they need to be put in place to ensure this massive migration of customers from KBC and Ulster Bank goes well,” he said.
“It is a big challenge for the institutions. There is a big responsibility now on the banks and the banking sector and the BPFI as their industry body to really put their shoulder to this and coordinate it,” he said.
Mr Kincaid said customers of Ulster Bank and KBC will be given sufficient notice to move their accounts to other financial institutions.
But he noted that they do not have to wait to get that notification from either lender before beginning the process.
“But it is a very significant exercise that they need to put resources into and do well, and I think they are not yet where they need to be, but I do know there is a lot of work going on in the institutions to get to that,” he said.
He added that the recent research and action by the regulator on unacceptable call waiting times for bank customers showed its willingness to intervene where necessary to ensure consumer rights are met.
“What we are doing now is monitoring and scrutinising very closely their preparations and the progress and will continue to scrutinise that progress as it goes along. It is really only getting started,” he claimed.
Mr Kincaid was speaking to RTÉ News as the Central Bank published its Consumer Protection Outlook Report.
It outlines five key risk areas that financial firms should take action on to avoid consumer harm.
These have been distilled down from 145 risks identified during a cross-industry risk assessment.
Among the five is the changing operational landscape, which the bank says means firms must navigate in a manner that places the best interests of consumers at the heart of their commercial decision-making and avoid creating risk for consumers.
Another area of concern identified in the report is technology-driven risks to consumer protection.
The Central Bank said that as firms develop and deploy new tech, they must ensure they take enough care to mitigate the risks of harm to consumers that can arise.
The regulator also points to the potential risks from shifting business models and claims it is imperative that any changes that are made lead to a better service to consumers.
Firms must also manage the transition for consumers in a responsible, transparent and fair way, it says.
Mr Kincaid points to cryptoassets as one example of both a potential technology driven risk and a shifting business model.
“We have a very changing landscape in financial services,” he said.
“The whole role that financial innovation will play in years to come is something we have to have a very very good handle on, as a society,” he added.
He said consumers have to be very vigilant and careful if they are dealing with an unregulated product that they are clear about that and they understand the risks of that.
“And if people have any concerns about that, to stop, go to the Central Bank of Ireland website and see if the entity you are dealing with is a regulated entity or not,” he said.
So does that mean that cryptoassets should be regulated more actively and tightly, he was asked?
“It is definitely an evolving area and you would have seen around the world different regulators taking different approaches,” he said.
“In Ireland what we have always done is for these kinds of topics is to work at a European level to get a European consensus and a European approach,” Mr Kincaid stated.
He added that there is EU legislation currently going through the legislative process that will bring some regulation to the area of cryptoassets.
“The difficulty with these kinds of innovation is if someone wants to position themselves outside of the regulated environment they can innovate and design products to position themselves outside of that,” he said.
He added that the message for consumers therefore is to be clear whether they are either dealing with a regulated entity, or dealing outside of the regulatory process, and in this case be aware of the risks and lack of protections if things go wrong.
The other two areas of risk identified in the report are poor business practices and weak business processes, as well as ineffective disclosures to consumers.
The report also sets out the work being done by the regulator to deliver on its strategy in relation to the risks.
The Central Bank has asked the public to provide feedback on what risks it sees and is also planning a series of engagements with stakeholders over the coming months.