Lack of Central Bank enforcement of Consumer Protection Code

odyssey06

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The Central Bank's record on enforcement has come under scrutiny after it emerged that apart from the tracker mortgage controversy, it has not taken a single action over a breach of the Consumer Protection Code in the last four year. This compares to 26 enforcement actions for breaches of the code that were taken between 2006 and 2016...
The information was revealed by the Minister for Finance in response to a parliamentary question submitted by Labour Party Finance spokesman, Ged Nash who said the results are scandalous.
"I find it hard to believe that not one of those firms breached the Consumer Protection Code in the past four years, especially as the Central Bank issued 26 fines in the 10 years to 2016."

 
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Brendan Burgess

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30,000 people have tracker mortgages and compensation which they otherwise would not have were it not for the enforcement action of the Central Bank.

In the past, the Central Bank was very good at reprimanding banks because they had breached the Consumer Protection Code by not having "Regulated by the Central Bank of Ireland" in big enough letters on their ads.

I am delighted to see that the Central Bank has, at long last, got its priorities right.

Few people appreciate the demands that the Tracker Review placed on the Central Bank. I commend them for their focus.

And, of course, if there is some other systemic and material breach of the CPC, they should follow that up as well.

Brendan
 

odyssey06

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My concern is how reactive they are rather than pro-active.
Plus, they seem to have a single focus at a time which clouds all other issues.
Of course they should focus and prioritise on major issues, but not at the expense of taking eye off the ball of what else is going on.

In the early part of the 2010s they handed out significant fines to insurance companies for example.
The latter part was all about the tracker review.
 

Brendan Burgess

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Hi Odyssey

If there is some material and systematic breach of the CPC, they should be enforcing it.

If the Ombudsman has detected a potentially systemic breach, then he would notify the Central Bank. Their first step is to get compliance, and fines only follow if needed.

Have you a summary of their fines on the insurance companies? Were they for breaches of the code or for regulatory or reporting issues?

Brendan
 

odyssey06

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Periods range from 2012-2016 for CPC fines.

Central Bank were conducting systematic audits of CPC handling of some\all of the insurance companies below during this period.

Fines of €500k against Aviva (Health Insurance and Life & Pensions arms) for CPC breaches

Note Aviva were also fined €2.4 million in 2012 for breaches of regulations around "administrative procedures and internal control mechanisms in respect to stock lending activity were inadequate in both subsidiaries."

Fine of €650,000 on New Ireland Assurance Company plc for breaches of the Consumer Protection Code

Axa Insurance fined €675,000 by Central Bank for four-year breach of consumer code

€490,000 fine for FBD Insurance after consumer code breaches
 

odyssey06

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It would be good to know if the Central Bank have been obtaining compliance via warnings etc so that things don't progress to the stage where formal enforcement action is warranted.
 

Brendan Burgess

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I suspect that the companies probably realise that compliance is important so maybe they have improved their act.

Brendan
 

odyssey06

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I suspect that the companies probably realise that compliance is important so maybe they have improved their act.
Brendan
In the sectors that were previously targeted yes. Processes systems etc would have been put in place. Compliance divisions beefed up ... but a bit like a vaccine, institutional memory may only last for so long with staff turnover etc
 

Brendan Burgess

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Would some people be happier if, instead of getting 30,000 people back their trackers and life changing sums of money, that the Central Bank would have issued 10 warnings a year to insurance companies because

People who answered questions from callers did not have a QFA supervising them.
The quarterly statutory returns were made in error
Inadequate controls over stock lending
Violations by an outsourced partner.

From what I can see from these enforcement actions, no client has suffered?

I have dealt with the Central Bank for years and the Financial Regulator before them. They used to exercise no judgement. If they could find a technical breach of some rule, they would be able to take action. But if you told them that an advert was completely misleading, then nothing at all every happened. They thought it a matter of opinion.

Ask the lenders would they like a return to the old Central Bank and you can be quite sure that they would.

A lot of Credit Unions are complaining about the current enforcement and regulatory action of the Central Bank. The Irish consumer lost out badly when recent excessive enforcement resulted in the closure of the best stockbroker , Campbell O'Connor.


Brendan
 

odyssey06

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Would some people be happier if, instead of getting 30,000 people back their trackers and life changing sums of money, that the Central Bank would have issued 10 warnings a year to insurance companies because...
Is anyone saying that? It seems to presume that it was an either or, or even that the same level of focus should have been assigned to tracker issue as other responsibilities. I'm not aware of any reason why that presumption is warranted.
It shouldnt' be all or nothing.
So I think it is reasonable to ask what is going on with the full range of the responsibilities of the Central Bank which include CPC enforcement across all organisations it oversees.
 
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Brendan Burgess

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The Central Bank has limited resources and must prioritise.

I agree about 90% with their priorities.

I would prefer to see their best staff working on the tracker mortgage examination, rather than doing site visits to insurance companies checking that the people answering the phones don't wander from the script.

Brendan
 

Gregmill

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I would agree with Odyssey06
It seems very strange that other than the tracker issues there have been no fines by the central bank over breaches of the CpC code over the past four years.

I would also agree that there shouldn’t be an all or nothing approach and I just wonder has the FSPO reported ANY breaches of the code since Ger Deering took over.

Just to be clear, finance companies as per the Code are supposed to act in their customers best interests. Take PTSB for example they were fined 21 million euro last year for 42 separate breaches of the code.

A leopard finds it hard to change its spots and one would question have banks and insurance companies suddenly become pillars of society all of a sudden.

There needs to be ongoing monitoring of these companies to ensure they actually comply with the code and their legal obligations.
 
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