Banks need to do more to help customers transfer banks - Central Bank

A roundtable of CEOs will take place focused on the retail banks’ plans to ensure consumers’ best interests are protected

Central Bank warning: 'In terms of the banks’ overall plans, more needs to be done.'

The Central Bank has warned Irish banks that they need to do more to protect customers as they transfer their accounts from Ulster Bank and KBC.

In a letter to the CEOs of the main pillar banks, the Central Bank said they must have sufficient plans, preparations and resources in place to respond to the unprecedented migration of accounts. They warned the banks that they would "intervene to the full extent of our powers" if banks fail to transfer customers over in a timely and efficient manner.

The planned departures of Ulster and KBC mean hundreds of thousands of customers are in the process of moving accounts to other banks.

However, the Central Bank said it has concerns about the process and that key requirements include sufficient notification periods, continuity of service for customers and a focus on vulnerable customers.

"As the process of closing bank accounts now commences, the imperative for departing and remaining banks to demonstrate that they have sufficient plans, preparations and resources in place to deliver on our expectations," Derville Rowland, the Central Banks' Director-General for Financial Conduct said.

"But while recognising the challenge an exercise of this scale represents, it is also clear that, in terms of the banks’ overall plans, more needs to be done.”

The Central Bank said it will also convene a roundtable of the CEOs of the main retail banks next month to focus their plans to ensure consumers’ best interests are protected. At that meeting, they want to hear from the banks about any emerging issues that are occurring when switching customers' accounts such as problems transferring direct debit payments, ensuring there are no waiting periods for customers to apply for overdrafts and that vulnerable customers are not at risk of making uninformed decision.

This week, Bank of Ireland said it utilise 500 staff to meet the “unprecedented” demand for new accounts. The number of its new current accounts has already climbed by over 80% from a year ago, and it warned that utility companies, telecom providers, and other firms will need to continue to deal with their customers to help with the switch over.

Ulster and KBC have been issuing letters to customers in phases with a view to managing the flow of migrations. The Central Bank said all duties of the existing provider under the law remain until the customer has been properly onboarded to another bank.

In addition to convening the CEO roundtable discussion, the Central Bank has written to other companies that regularly apply direct debits on accounts such as insurance companies to remind them of their duty to make sure such arrangements are transferred smoothly to new banks.

Ulster Bank, the country's third-largest lender and major mortgage bank KBC announced they would depart the Irish banking market last year in what is viewed as a significant reduction in the level of banking competition offered here.

The Competition and Consumer Protection Commission has launched in-depth investigations into the acquisition of departing banks' loan books by various remaining pillar banks over concerns about the impact it will have on competition in the country's banking sector.