Banks told 'do more' to protect 1m customers who could be left in limbo

Banks told 'do more' to protect 1m customers who could be left in limbo

Account-holders are being warned to act fast to avoid non-payment of utility bills and direct debits, which could impact their long-term credit rating.

Irish banks have been told they must do more to protect consumers, as the imminent departure of Ulster Bank and KBC Bank from the market threatens to leave over 1m personal and business account-holders in financial limbo.

"Customers did not ask to be in this situation," Central Bank chiefs warned on Tuesday, after a roundtable meeting with the five main retail banks where it was agreed “more work is required”.

The departure of these banks from the Irish market will mean that roughly 1m accounts will need to be switched to different financial institutions, an “unprecedented” situation in Irish banking.

Account-holders are being warned to act fast to avoid non-payment of utility bills and direct debits, which could impact their long-term credit rating.

Financial services adviser Padraic Kissane, a member of the Irish Banking Culture Board, said there would be big issues for customers around direct debits and the need to leave funds in two accounts during the switch over. 

"When you are closing one account and opening another account, you have nearly got to leave a month's worth of money in one account," to ensure the direct debits are transferred properly, said Mr Kissane.

He said there was "no getting away from the scale of the problem" caused by the closures of Ulster Bank and KBC Bank, adding the focus of efforts should be on helping vulnerable customers.

Older customers in particular have been expressing “deep frustration” at the process of switching at a time when their local branch has also recently shut following recent closures from the likes of AIB and Bank of Ireland.

Age Action’s head of advocacy and communications Celine Clarke said: 

People are really, really worried. We’re hearing from people since February about these issues. People worried about getting direct debits transferred over in time, and shifting their utility payments.” 

Derville Rowland, the director general of financial conduct at the Central Bank, said the Irish banking system faces a challenge but it is one “that must be met so that the banking system delivers for its customers”.

“They have rights which must be protected and expectations built up through their relationships and interactions with the banking system that must continue to be met as this exercise proceeds,” Ms Rowland said.

While not all customers may have received correspondence from their bank of the need to switch as of yet, the clear advice for those with KBC or Ulster Bank current accounts is to take steps now to make that switch.

Daragh Cassidy, head of communications at Bonkers.ie, said: “Don’t wait till your bank writes out to you. Get a new account opened up as soon as possible.” 

Representatives from the main banks are set to be grilled on the plans in place on Wednesday afternoon before the Oireachtas finance committee.

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