Paschal Donohoe defends Central Bank performance on Consumer Protection Code

Central Bank handed out 26 enforcement actions for breaches of code between July 2006 and July 2016. Since then, however, it has only fined Permanent TSB and KBC Bank Ireland

The Central Bank has been criticised over a perceived lack of enforcement relating to its Consumer Protection Code

Finance Minister Paschal Donohoe has defended the Central Bank against accusations it is not enforcing the Consumer Protection Code and is failing to punish financial services firms for breaching its own rules.

Ged Nash, Labour’s finance spokesman, said the Central Bank has “major questions to answer” in relation to enforcing the code.

Mr Nash claimed the Central Bank has “not done a single enforcement action” for a breach of the Consumer Protection Code — outside of the tracker mortgage scandal — in more than four years.

He said the “revelation” comes at a time when there are “major questions over the treatment of consumers by banks and insurance firms in relation to dual pricing, rocketing car insurance, and some of the highest mortgage rates in Europe".

The Central Bank handed out 26 enforcement actions for breaches of the code between July 2006 and July 2016. Since then, however, it has only fined Permanent TSB and KBC Bank Ireland — €21m and €18.3m, respectively — in relation to their roles in the misselling and overcharging scandal involving tracker mortgages.

Finance Minister Paschal Donohoe said the Central Bank uses “a wide range of other tools”, outside of fines, to take action against companies which breach regulation. File Picture: Julien Behal

Mr Donohoe underlined these two sanctions in response to a parliamentary question by Mr Nash, asking why the Central Bank had “ceased” to enforce the code.

Mr Donohoe said the Central Bank uses “a wide range of other tools”, outside of fines, to take action against companies which breach regulation. 

“The Central Bank has advised me that it continues to give focus to the Consumer Protection Codes in both its supervisory and enforcement work,” he said.

Mr Nash said the Central Bank is either “turning a blind eye” to misbehaviour of financial services firms or does not know what is going on.

“The Consumer Protection Code is supposed to be the document that protects consumers from being treated unfairly by financial services firms, and now we learn that the Central Bank has stopped enforcing any breaches of that code, despite the fact that it regulates over 10,000 firms,” he said.

“I find it hard to believe that not one of those firms breached the Consumer Protection Code in the past four years, especially as the Central Bank issued 26 fines in the 10 years to 2016. The number of fines dropped off a cliff after that for some reason,” he said.

Mr Nash said the small volume of fines in recent years is “simply scandalous”.

A Central Bank spokesperson said the regulator continues to hold firms and individuals accountable where there are serious breaches of standards and regulatory requirements.

“It is essential to understand that these robust enforcement actions span the entire mandate of the Central Bank, and are not limited to breaches of the Consumer Protection Code alone. 

"In addition to taking action against firms and individuals, we also act to keep unfit firms and individuals out of the sector, through our rigorous authorisations process and fitness and probity regime,” the spokesperson said.

“We continue to monitor all firms through intrusive and robust supervision, challenging boards and executive management."