Ulster and KBC warned that may not close until customers are gone
Ulster Bank and KBC Bank Ireland have been warned by the regulator that they will be blocked from exiting the market if replacement banking services are not provided for their customers.
The Central Bank asked departing banks to oversee the planned departure, which has been described as a massive upheaval in financial services.
And a new steering committee made up of banks and regulator is to be set up to handle large scale switching and account closure operations.
The move comes as the central bank was recently heavily criticized for a low-key approach to the imminent departure.
It was urged by the consumers’ union to “pull out your finger” and do more to prevent the shutdown from turning into a “disaster”.
The central bank was asked to set up a steering committee to close current and deposit accounts and help consumers set up new accounts. One lakh accounts affected
Now Derville Rowland, director general for financial conduct at the Central Bank, has stressed that the regulator is “strongly monitoring banks” while there are profound structural changes in the retail banking landscape.
He said the departing banks had done a good job, but stressed the need to do more.
His colleague, Colm Kincaid, director of consumer protection at the Central Bank, has written to KBC and Ulster Bank along with the three remaining banks, calling for a “round table” committee of banks.
He cautioned the banks to make new banking arrangements for the affected customers in a time bound manner.
This is “to ensure the continuity of banking services to the consumers”.
“The central bank will continue to track this matter as the transfer of accounts proceeds and will intervene to the fullest extent of our powers where this expectation is not being met.”
The context of the regulator’s intervention is understood to mean that it will completely shut down KBC and Ulster Bank if their customers are left without banking services after the account closure deadline has passed.
The Central Bank also cautioned that departing banks have a duty to ensure that new banking services are available to customers before they close.
In a letter to CEOs of five retail banks, it has been warned that customers affected by the closure should be given adequate notification period about their plans to close their accounts.
Arrangements should be made for continuity of service to customers, and banks should help vulnerable customers.
The closures represent a bank switching exercise in the state’s history.
The average customer has a maximum of 10 direct debit and standing orders in a month, which they must personally transfer to another bank.
About seven million different direct debit, recurring card payments and credit transfers could be affected by the massive movement of customers to new providers.
It emerged last week that people looking for a new bank were being barred from opening credit card accounts and availing overdraft facilities.
Customers applying for overdraft or new bank cards are facing long delays as they have to go through a creditworthiness assessment. Many are likely to refuse.
In many cases, a week and sometimes months are being given to those seeking in-person appointment.
The president of the Consumers Union of Ireland, Michael Kilcoyne, said the mass closures were turning into “chaos” and urged the central bank to intervene.
“There are hurdles coming in the way of consumers to open new accounts and the regulator needs to step in,” he said.
Those who wish to transfer to a bank where they can avail overdraft, will have to operate their new account for three months before applying.
