RaboDirect closure prompts review call

The Central Bank should urge RaboDirect to consider extending its notice period beyond May because of the unprecedented effects its decision to shut a €3bn savings operation will have on its 90,000 Irish customers, consumer and financial experts have warned.

RaboDirect closure prompts review call

The online savings bank set up shop in Ireland almost 13 years ago. It has shocked financial advisers by saying it will close on May 16, so its 90,000 customers face a scramble to set up new savings accounts with the small number of rivals that survived the financial crisis.

The closure of a eurozone savings bank after the crisis is unusual, though Rabo- Direct is acting within the Central Bank Consumer Code which allows a lender to give customers “at least” two months’ closure notice.

Consumers’ Association of Ireland policy adviser Dermott Jewell said 90,000 was “a phenomenal number of customers” to move accounts at one time.

“We would be surprised at the short notice being given” and the Central Bank should approach RaboDirect’s parent to encourage it to extend its closure period. “It is not acceptable given the short deadline,” he said.

Nikki Digby, director of impartial.ie, which provides financial advice, said it was too short for people to get their affairs in order saying that it could panic many customers, particularly elderly.

“They (Rabo) should try and make it as easy as possible,” she said. Ms Digby said the closure will reduce further the limited competition in the Irish savings market when the ECB starts in time to raise deposit and interest rates.

RaboDirect said it was providing a longer period than the 60 days stipulated by the code. The Central Bank said it doesn’t comment on issues about a regulated lender.

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