Protecting consumers - Watchdogs must have real teeth

EARLIER this week the Financial Regulator’s consumer panel reported that consumers are being “mercilessly fleeced” by banks trying to rebuild balance sheets crippled by mismanagement and greed.

The panel also severely criticised the “unacceptable” pace of investigations into how Ireland’s financial system imploded. The process, said the watchdog, “leaves a lot to be desired”.

Having pointed out that the wretched banks are using their muscle to squeeze some mortgage customers – anyone not on a tracker mortgage – to pay for their piracy through some of Europe’s highest interest rates, and, having pointed out that the investigations into our financial collapse are a long way short of convincing is it any wonder that the panel faces the axe under legislation before the Oireachtas?

Challenging such powerful forces has, as it always had, consequences but what is so destructive to our democracy, to every citizen’s sense of the value of being Irish, of having a stake in a functioning society, is the perception that the state is not as effective, vigorous or determined as it should be in pursuing these matters.

Each week that passes that perception becomes stronger and stronger even though Seán FitzPatrick insists, with a straight face, that he lives on €188 a month.

“Furthermore, there has been very little outcome from ongoing investigations into dealings at some of our major institutions by the gardaí, Office of Director of Corporate Enforcement or the Financial Regulator,” was how the panel put it, casting a shadow of suspicion over three of the arms of the state that we must be able to have absolute faith in.

When you cut to the heart of the matter, it means that the banks remain as indifferent to the idea of social responsibility as they ever were and they behave like this because there will be no consequences.

As we face into a future where competition in the banking sector will not be anything like it was not so long ago, it is disconcerting to learn that it is proposed to replace the regulator’s panel it with a group that will advise the Central Bank on consumer issues.

In the context of our recent history, the word “advise” seems pathetically limp-wristed, a kind of bewildered first cousin of light-touch regulation.

The panel’s frustration was palpable in its report and it suggested a three-pronged approach to protecting consumers.

The first was a campaign to make everyone aware of what the consumer protection code, which will reviewed later this year, can do to protect consumers.

Secondly it said that we need measures to protect consumers from the consequences of reduced competition, a situation that it fears banks will exploit.

It also recommended that the Central Bank Commission review all new financial products and that if they are unhappy with them, that they be allowed to prohibit their introduction to the market. This is already standard procedure in the US so it should not be in any way difficult to implement.

The record shows that our Government will not introduce legislation that would stand between banks and consumers unless it absolutely has to so it may be necessary to bring leverage to bear. Implementation of the Croke Park deal might be a good place to start.


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