Brendan Burgess
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Interesting article by Charlie today
Charlie Weston: 'Time to look at stripping Central Bank of its consumer protection role as people are let down again'
Charlie is right in saying that dual pricing of insurance products should be banned. So I would agree with him that on the insurance issue, the Central Bank is not doing a good job. But how are they doing in other areas?
Depends on the issue.
Mortgage rates 0/10
Their performance on mortgage rates has been shockingly bad. They published misleading information claiming the rates were just a bit higher than the rest of the eurozone for years. Even after I corrected them, it took a change of Governor to start publishing the correct information.
They do nothing to bring the outrageous rates under any form of control. They allow cash backs to distort the market and fool customers. They don't require banks to treat existing customers fairly.
They published a really rubbishy report justifying the high rates in Ireland.
They impose capital requirements on banks which mean that a foreign lender would need higher capital the Irish banks with their history of reckless lending.
Of course, the Central Bank is not the only party to get 0/10 for this. The political system which allows people to continue to live in their homes for years without paying a penny on their mortgage is more to blame than the Central Bank.
Trackers 8/10
After a very slow start, they have done a great job. About 25,000 people have got trackers back and substantial redress and compensation. This simply would not have happened without the Central Bank's involvement. A few hundred might have been organised enough to go to the Ombudsman and only some of them would have succeeded. The Central Bank persuaded the banks to go well beyond their legal obligations.
Of course, I disagree with the Central Bank on their interpretation of some cases. But that is not to say that they are wrong and I am right. For example, I disagree with the way they have agreed with AIB on the prevailing rate issue. But, I have to admit, that without the Central Bank, the prevailing rate issue would be dead. By forcing AIB to acknowledge a "service error", they opened up the Ombudsman and High Court to these 6,000 customers
Mortgage lending limits 9/10
These have been very cleverly designed and calibrated. They are preventing the borrowers from reckless borrowing and the banks from reckless lending.
Mortgage Arrears - Not sure
The Code of Conduct on Mortgage Arrears is great for protecting borrowers in genuine difficulty who are being treated badly by their lenders.
But it allows the chancers to get away with not paying for years.
Insurance
I suspect it's a bit like putting 100% of the blame on the Central Bank for high mortgage rates.
The fundamental problem is the claims culture. There isn't much that the Central Bank can do about that.
And given the history of insurance company collapses in Ireland, the Central Bank is right to prioritise the solvency of the insurance companies. That is the most important aspect of consumer protection.
And just as the Central Bank should ban lenders from treating existing customers unfairly in relation to new customers, I agree with Charlie that dual pricing in insurance should be banned.
Several insurers in this market are using big data to segregate consumers into those who will bear a big price rise, despite being a loyal customer, and those who will not.
This is known as dual pricing and it is effected by use of what is known as price optimisation software.
These software packages use algorithms to separate out customers and identify those ripe for predatory pricing, so-called dual pricing.
Charlie Weston: 'Time to look at stripping Central Bank of its consumer protection role as people are let down again'
Charlie is right in saying that dual pricing of insurance products should be banned. So I would agree with him that on the insurance issue, the Central Bank is not doing a good job. But how are they doing in other areas?
Depends on the issue.
Mortgage rates 0/10
Their performance on mortgage rates has been shockingly bad. They published misleading information claiming the rates were just a bit higher than the rest of the eurozone for years. Even after I corrected them, it took a change of Governor to start publishing the correct information.
They do nothing to bring the outrageous rates under any form of control. They allow cash backs to distort the market and fool customers. They don't require banks to treat existing customers fairly.
They published a really rubbishy report justifying the high rates in Ireland.
They impose capital requirements on banks which mean that a foreign lender would need higher capital the Irish banks with their history of reckless lending.
Of course, the Central Bank is not the only party to get 0/10 for this. The political system which allows people to continue to live in their homes for years without paying a penny on their mortgage is more to blame than the Central Bank.
Trackers 8/10
After a very slow start, they have done a great job. About 25,000 people have got trackers back and substantial redress and compensation. This simply would not have happened without the Central Bank's involvement. A few hundred might have been organised enough to go to the Ombudsman and only some of them would have succeeded. The Central Bank persuaded the banks to go well beyond their legal obligations.
Of course, I disagree with the Central Bank on their interpretation of some cases. But that is not to say that they are wrong and I am right. For example, I disagree with the way they have agreed with AIB on the prevailing rate issue. But, I have to admit, that without the Central Bank, the prevailing rate issue would be dead. By forcing AIB to acknowledge a "service error", they opened up the Ombudsman and High Court to these 6,000 customers
Mortgage lending limits 9/10
These have been very cleverly designed and calibrated. They are preventing the borrowers from reckless borrowing and the banks from reckless lending.
Mortgage Arrears - Not sure
The Code of Conduct on Mortgage Arrears is great for protecting borrowers in genuine difficulty who are being treated badly by their lenders.
But it allows the chancers to get away with not paying for years.
Insurance
I suspect it's a bit like putting 100% of the blame on the Central Bank for high mortgage rates.
The fundamental problem is the claims culture. There isn't much that the Central Bank can do about that.
And given the history of insurance company collapses in Ireland, the Central Bank is right to prioritise the solvency of the insurance companies. That is the most important aspect of consumer protection.
And just as the Central Bank should ban lenders from treating existing customers unfairly in relation to new customers, I agree with Charlie that dual pricing in insurance should be banned.
Several insurers in this market are using big data to segregate consumers into those who will bear a big price rise, despite being a loyal customer, and those who will not.
This is known as dual pricing and it is effected by use of what is known as price optimisation software.
These software packages use algorithms to separate out customers and identify those ripe for predatory pricing, so-called dual pricing.
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