Six banks named for mis-selling
The Central Bank has named six of the seven lenders ordered to review whether they had mis-sold payment protection insurance with loans or credit cards, and has warned that lenders face enforcement action over any misselling.
Bank of Ireland, AIB and its subsidiary EBS, GE Money, Ulster Bank and Permanent TSB were directed in September to review sales of the insurance since August 2007, the Central Bank said.
The seventh lender asked not to be named by the regulator.
The banking regulator said it had extended its investigation to look at payment protection insurance sales by other banks and credit institutions. “Enforcement actions are also being considered,” the Central Bank said.
The seven lenders will be informing customers over the coming weeks about their review of payment protection insurance sales and the expected timelines, the regulator said.
The institutions have been asked to engage “independent third parties” to oversee the reviews and the Central Bank will be monitoring the reviews closely, its director of consumer protection Bernard Sheridan said.
“Consumers of the firms undertaking the reviews do not need to do anything at this point; they will be contacted directly by their PPI seller in relation to the review process and next steps.”
The Central Bank warned consumers that they can be charged significant fees by management companies making claims on behalf of customers who have been missold insurance products.
Payment protection insurance ensures that a customer’s loan or credit card debts will continue to be paid in the event they are unable to make the repayments because they are sick or lose jobs.
The insurance does not apply to certain individuals, including self-employed and unemployed people as well as contract workers, though these individuals may have been missold these products.
More than 340,000 payment protection policies were sold in Ireland over the past five years.
The Irish Banking Federation's chief executive Pat Farrell said the banks would go through their files on payment protection and any cases of suspected misselling would be referred to the Central Bank. He said there was no need for consumers to engage third party firms to oversee the claim as the process in place would take care of processing any claims due.
The Financial Services Ombudsman said people complaining about payment protection insurance almost doubled to more than 400 in the first half of the year. The Central Bank has said complaints over prior to August 2007 must be dealt with under the 2012 Consumer Protection Code.
Fianna Fáil finance spokesman Michael McGrath said serious sanctions must be imposed on banks and executives who were found to be responsible for the mis-selling of such insurance policies.
"Will those banking executives responsible for flouting the Central Bank rules and selling payment protection insurance policies be held to account in any way? In my view, the culture within the banks will never change until there are consequences for malpractice," he said.