Enforcement action against banks likely
The financial services ombudsman has already received complaints from 771 consumers in relation to payment protection insurance since 2007.
The Central Bank has carried out a review of seven financial firms who were selling the policies in Ireland.
The financial regulator does not have the authority to name the firms involved, but it has written to them outlining the grounds for concerns and is considering possible enforcement action against a number of companies.
In a letter, Patricia Moloney, Central Bank head of consumer protection insurance, investment and intermediaries, said the regulator had concerns with:
* Firms not gathering sufficient information to enable them to determine whether the product sold was suitable for the consumer;
* Firms treating certain sales as ‘execution only’ without complying with the relevant requirements of the 2006 code;
* The timing of the provision of key information to consumers by firms;
* Failure to bring key information on policies explicitly to the attention of consumers; and
* Poor record keeping and incomplete files.
Ms Moloney said that in some cases, firms had none of the core documents required for selling of payment protection policies.
“During the course of its review, the Central Bank identified cases where some firms were unable to provide entire files in relation to consumers, including records of telephone sales, while other files, which were provided were missing key documents such as application forms or statements of suitability,” she said.
Dublin Law firm McHale Muldoon has welcomed the move to review the firms that were involved. The legal firm has been acting on behalf of hundreds of customers who have been mis-sold policies.
Micheal Muldoon, a partner in McHale and Muldoon, said he would be surprised if institutions in Ireland were not using similar practices to those in the UK that resulted in a €10bn refund to consumers.
“Very similar rules apply in Ireland, and the banks were selling the same policies in the same way. Therefore it should follow that the Central Bank should reach similar conclusions to the regulators in the UK,” he said.
