BANKS HAVE been accused of breaking consumer protection laws by monitoring account transactions and using information gleaned from them to put pressure on consumers to switch from independently sourced products to products sold by the banks, according to the State’s largest group of financial brokers.
A survey released at the agm of the Professional Insurance Brokers’ Association (Piba) today found that 76 per cent of brokers say consumers are being pressured to take out bank’s in-house products in order to maintain overdraft and other loan facilities.
The survey also claims that customers’ account transaction details, such as direct debits going to other institutions, are being targeted to persuade consumers to switch to in-house products.
“These are illegal practices. The banks are flagrantly violating consumer protection laws and pressurising consumers who feel they have little choice because their credit facilities could be curtailed or withdrawn,” said Piba chief executive Diarmuid Kelly.
“Because of the surreptitious nature of the pressure being applied and the uneven nature of the relationship, which is particularly acute given the economic situation, consumers are loath to report such practices for fear of the financial consequences for themselves.”
The brokers’ group recently met the Data Protection Commissioner to highlight the issue.
Last year a Data Protection Commission report found, among other things, that, “in several institutions our investigations revealed marketing customers on the basis of information contained in their direct debits, such as a monthly payment to another financial institution or a payment to the life branch of an insurance company”.
Mr Kelly said that Piba members were also hearing of cases where certain banks were making the acquisition of one product contingent on another product also being taken out – a situation in clear breach of the Consumer Protection Code.
Piba has issued guidelines to its 850 member firms, outlining the process for making formal complaints against the banks to either the Central Bank or the Data Protection Commissioner.
Responding to the report, chief executive of the Irish Brokers’ Association Ciaran Phelan said consumers who wanted expert advice on insurance “should go to an independent insurance broker, and if they want expert banking advice, they should talk to a bank manager”.
He said that when customers deal with a bank in relation to insurance products “they invariably deal with an individual that represents the interests of the insurance company; whereas an independent broker represents the customer, both at point of transaction and when there is a claim”.
