Central bank says more ‘joined-up planning’ needed on bank exits

BPFI has hosted three virtual meetings with direct debit originators in recent months

Central Bank officials told the heads of the State's retail banks on Tuesday that there is a need for more "joined-up planning" on the movements of hundreds of thousands of accounts as Ulster Bank and KBC Bank Ireland exit the market.

At a roundtable discussion called by the regulator, they also said the banking sector should engage closely with utility companies and other direct debit originators to avoid payment issues as bank accounts are closed and customers move to alternative providers.

A spokeswoman for the Banking & Payments Federation Ireland (BPFI), the industry lobby group, said it has organised three virtual meetings with representatives of 25 direct debit originators operating in the Irish market in recent months to help prepare them for issues that may crop up as Ulster Bank and KBC Bank Ireland retreat. The largest direct debit originators would include Electric Ireland, Bord Gáis and Irish Life.

BPFI has also written to the State's telecommunications regulator, ComReg, which oversees the likes of Eir, Sky and Vodafone, and the Commission for Regulation of Utilities requesting them to engage with companies they oversee as the banking system goes through the biggest movement in deposit and current accounts in the history of the State.

Customer focus

Derville Rowland, director general of financial conduct with the Central Bank, said: "It is clear that a lot of work is being done. But we must also accept that the customers affected by these issues did not ask to be in this situation.

“They have rights which must be protected and expectations built up through their relationships and interactions with the banking system that must continue to be met as this exercise proceeds.”

Ulster Bank and KBC Bank Ireland have recently begun writing to holders of more than one million current and deposit accounts, giving them six months' notice to find alternative homes for their banking activities. KBC's deposit accounts are set to transfer to Bank of Ireland as part of a wider deal that also involves the sale of its almost €9 billion of performing loans.

While the three Irish banks – AIB, Bank of Ireland and Permanent TSB – say they are currently deploying hundreds of staff to help manage an expected surge in account openings, there have been reports from consumers of delays in securing appointments and long call-waiting times across the industry.

A key concern is around the handling of the opening of current accounts with new providers, together with their attending direct debits, standing orders and regular payments.

Direct debits

Even in cases where existing direct debit arrangements can, in theory, move under a Central Bank switching code, many direct debit originators and receivers will only take instructions directly from their customers, according to banking industry officials.

"The meeting provided a good analysis of where we are right now and where we need to get to, because we're not at that point yet and it is going to take time given the scale of the migration of accounts that's going to occur," said BPFI chief executive Brian Hayes.

“The Central Bank recognises that there are wider stakeholders within the system with which we all need to work and we will continue to engage with the Central Bank in relation to areas we think we can improve around the customer journey, something which all the banks are committed to doing.”