ULSTER Bank and KBC Bank Ireland have been warned by regulators that unless substitute banking services are put in place for their customers, they will be prevented from exiting this market.
The central bank told the exiting banks that it should step up its oversight over the planned exits, which have been described as a massive upheaval in financial services.
And a new steering committee made up of banks and the regulator is set to be set up to handle the massive switching and account closure operation.
The move comes after the central bank was recently heavily criticized for viewing upcoming exits as dovish.
She had been urged by the Consumers’ Association to “stick the finger out” and do more to ensure the closures don’t become a “disaster”.
The central bank has been ordered to set up a steering committee to coordinate the closing of checking and deposit accounts and to help consumers set up new accounts. One million accounts are affected.
Now the Fed’s director-general of financial practices, Derville Rowland, has insisted that the regulator “assertively oversee the banks” while deep structural changes take place in the retail banking landscape.
She said the exiting banks had done a good job but insisted more needed to be done.
Your colleague, Director of Consumer Protection at the Central Bank, Colm Kincaid, along with the three remaining banks, have written to KBC and Ulster Bank calling for a ’round table’ committee of banks.
He warned the banks to make new banking agreements for affected customers in good time.
This is to “ensure that consumers receive continuity of banking services throughout”.
“The central bank will continue to monitor this matter as the accounts migration progresses and will intervene to the fullest extent of its powers if this expectation is not met.”
The reference to the intervening regulator is to be understood as blocking the full closure of KBC and Ulster Bank if their customers remain unbanked after the account closure deadlines.
The central bank also warned that exiting banks are required to ensure customers have new banking services before the shutdown.
The letter to the chief executives of the five retail banks warns that customers affected by the closures must be given adequate notice of plans to close their accounts.
Provisions need to be made for continuity of service to customers and banks need to help vulnerable customers.
The closures represent the bank switch in the history of the state.
The average customer has up to 10 direct debits and standing orders a month that they have to transfer individually to another bank.
Around seven million individual direct debits, recurring card payments and transfers could be affected by the mass migration of customers to new providers.
It emerged last week that people looking for a new bank are being prevented from opening a credit card account and getting an overdraft.
Customers applying for a bank overdraft or card from a new bank face lengthy delays as they have to undergo a credit check. Many will likely be rejected.
In many cases, those who want an in-person appointment can get an appointment weeks and sometimes months away.
Michael Kilcoyne, head of the Irish Consumers’ Association, had said the massive closure of accounts would turn into “chaos” and urged the central bank to intervene.
“There are obstacles being put in place for consumers to open new accounts and the regulator needs to step in,” he said.
If you want to make a transfer to a bank where you can take out an overdraft facility, you must have your new account for three months before you can even submit an application.
https://www.independent.ie/business/personal-finance/banking/ulster-and-kbc-warned-closures-cant-happen-unless-customers-have-moved-41593001.html Ulster and KBC warned closures can only take place once customers have moved