Section 7 of the FF Bill - any merit in it being its own bill?

T McGibney said:
Micromanaging the market into an oligopolistic cartel situation won't help these people.
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We will agree to disagree on this one !

BTW, just for the record I have switched in the past and am not stopped from switching again. I am not talking about my personal circumstance here.
 
gnf_ireland said:
Maybe I am being a bit thick here, but I cannot see how you have answered it. I see you repeat competition will sort the issue out, but how will it sort it out if they cannot switch?
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I've already told you. Proper competition will mean that all but the hardest of cases can switch or negotiate better terms. Market manipulation via excessive regulation means that all but the luckiest are locked into a cartel ripoff.
 
T McGibney said:
Tesco do offer finance products though. With clubcard points.
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Yes, they offer credit cards and insurance products. Insurance is year on year renewal rather than a 25-35 year commitment. Credit Cards are much easier to switch and do not require legal representation. Most people would consider a credit card a nice to have (especially since prepay cards now also exist). Most people would not consider a house nice to have.


Can I ask my question differently to you, since we are clearly thinking very differently on the current slant? Why would any company stop an existing customer availing of the latest offering they have on the market ?
 
gnf_ireland said:
Why would any company stop an existing customer availing of the latest offering they have on the market ?
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What sort of question is that? You know full well that companies in practically all sectors offer incentives for new customers that are not open to existing customers.

Tesco also offer mortgages btw, but not in Ireland. If the politicians could get off the pitch, I'm sure we'd see them doing mortgages here too.
 
T McGibney said:
I've already told you. Proper competition will mean that all but the hardest of cases can switch or negotiate better terms. Market manipulation via excessive regulation means that all but the luckiest are locked into a cartel ripoff.
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Ok, we can agree on the first half of the sentence. Sadly, I believe in the current market this is quite high. Maybe in 5 years this will have changed, but there are lots of customers currently blocked from switching.

The second half we can continue to disagree on. I consider myself one of the 'luckier' ones. I have a LTV of around 20% and a joint LTI of about 0.75 times. I still pay well over the odds on my mortgage rate. So as far as I am concerned, I am already in the 'cartel ripoff' scenario.
 

Yes companies offer fixed term acquisition promotions to acquire customers. So if company A launches a new offer to charge something at €35 a month but gives new customers a €15 promotion for 6 months, the offer is available to new and existing customers. The promotion only applies to the new customers and after the promotion term is over, they are all equal

Certain Mortgage providers here keep the customers separate for 25-35 years, so they are never equal - that is the core difference !


And yes, I do know Tesco Bank offer mortgages elsewhere.
 
T McGibney said:
You will continue to be so until the market is liberalised and the likes of Tesco can compete here
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Agree on that point. However, this is not about me personally. Its about all the people who cannot switch

I have zero sympathy for anyone who can switch to get a better rate but does not, for whatever reason. I accept they are still paying over the odds if they switch, but that's a different discussion (the rest of the bill).

Section 7 is about treating those who cannot switch fairly, and not penalising existing customers who cannot switch. As I said above, competition will not help them.
 
gnf_ireland said:
Section 7 is about treating those who cannot switch fairly, and not penalising existing customers who cannot switch.
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Bear in mind that if an existing customer of a bank cannot refinance their loan (for whatever reason) with another lender, then they are not in the same position as a new customer of that bank that can choose to take their business elsewhere. There must be some factor that distinguishes the two customers.

I agree that borrowers that cannot switch are deserving of a degree of statutory protection and I have outlined my suggested approach in this regard (a relative statutory cap).

However, trying to frame a workable statutory prohibition on lenders treating borrowers differently on the basis of some concept of "fairness" or "equality" would be (a) undesirable; and (b) next to impossible!

It's just not a practical proposal.
 

Ok I accept this as a reasonable argument in most cases. The KBC interest rate cut issue is different, but that is a different discussion.

The obvious distinguishing factors would be (a) historical arrears/judgement (b) reduced salary, (c) increased expenses (childcare being the obvious one) or (d) LTV changes due to drop in value of the property

However on the flip side, someone who has been regularly paying their mortgage month in month out despite any of the issues above have shown they are a solid customer. A new customer walking in off the street with no track record with the bank can be a more risky proposition. Part of the devil you know versus those you don't.
 
Sarenco said:
However, trying to frame a workable statutory prohibition on lenders treating borrowers differently on the basis of some concept of "fairness" or "equality" would be (a) undesirable; and (b) next to impossible!
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No sure why that would be undesirable? I think any person or institution being fair and reasonable to their customers would be something to be definitely encouraged.

As for the "next to impossible" part - not sure on that one. I will let the legal experts battle that one out.


I will add that the Consumer Protection Code already has guidelines on this, but as was stated yesterday the Central Bank does not appear to take it Consumer Interests role as seriously as its other roles.
 
gnf_ireland said:
However on the flip side, someone who has been regularly paying their mortgage month in month out despite any of the issues above have shown they are a solid customer.
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Yes but a potential refinancing lender would also have access to the customer's repayment history.

In the US (where they have a far more sophisticated approach to risk based lending), refinanced loans typically attract a lower interest rate than newly originated loans for precisely that reason - the customer effectively gets credit for already demonstrating repayment discipline.
 
gnf_ireland said:
No sure why that would be undesirable?
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Well, I regard any vague, ineffective regulatory intervention as undesirable in circumstances where we should be trying to promote and enhance competition within a market.

Trying to define what is and is not "fair" or "equal" treatment is an exercise in futility.
 
Sarenco said:
Trying to define what is and is not "fair" or "equal" treatment is an exercise in futility.
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Subjective rather than futile, which is where the Central Bank has some responsibilities as the authority. Check out the [broken link removed] and see how many times it refers to "fair", in particular this:

2.1 A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market;
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Yes and does anybody think this provision of the CPC is of any practical effect?

It doesn't give consumers a legal right of action and the Central Bank seems to ignore its own Code.

I actually think it's counter-productive in that it gives consumers the impression that banks are meant to be "fair" (whatever that means).

Banks are commercial enterprises. Their Directors have a (legally enforceable) fiduciary duty to one master - their shareholders.
 
Incidentally, I think the KBC business model is incredibly short-sighted and I've no doubt that it's losing them market share.

But that doesn't mean that I think it's practical or desirable to try and outlaw a particular business strategy - the market will decide what strategy succeeds.
 
Sarenco said:
Banks are commercial enterprises. Their Directors have a (legally enforceable) duty to serve one master - their shareholders.
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Do you not think banks have any responsibility towards their customers?
 
stefg said:
Do you not think banks have any responsibility towards their customers?
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Absolutely.

Banks have a responsibility to discharge whatever contractual obligations they have entered into with their customers.
 
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