Irish banks still lack ‘consumer-focused culture’, regulator warns

Central Bank highlights risks to Irish consumers of ‘irresponsible unsecured lending’

The Central Bank has identified a number of key risks to consumers of financial services in Ireland, including the continued "lack of a consumer-focused culture" within banks and financial firms.

In its latest Consumer Protection Outlook Report, the regulator highlighted the risk to consumers from "irresponsible unsecured lending" and from what it said was the ineffective disclosure of the risks attached to certain products.

The report also calls attention to risks to do with poor governance, the oversight of outsourcing arrangements, and the increased threat from cyber security attacks.


Ten years on from the financial crisis, the Central Bank’s report indicates that many of the same risks that underpinned the sector during the crash and subsequent scandals still exist.


The report cited a 2018 review of the behaviour and culture in Irish retail banks, which found “there wasn’t always a collective understanding of what consumer focus actually meant” and that a consumer focus was not always embedded in the banks’ structures, processes and systems.

The lack of a consumer focus has been repeatedly cited as a factor in the tracker mortgage scandal, which saw thousands of customers wrongly moved off tracker mortgages or overcharged on their existing accounts.

While unsecured lending played a valuable role in any functioning lending market, it warned the practice “can leave some consumers in danger of taking on too much debt or over-relying on short-term credit”.

In particular, it highlighted the speed at which credit can be accessed in the digital era and how this can result in consumers drawing down additional funds without taking sufficient time to consider the risks.


It noted that more than 300,000 consumers had used unsecured lending services provided by moneylenders in the Republic and that it would publish enhanced rules governing the practice later in the year.

The failure to give clear information to consumers about the benefits, risks and costs of financial products was also pinpointed as a risk factor.

The Central Bank said it was “driving firms” in the insurance sector to address the risks of ineffective disclosure.

In its report, the Central Bank also addressed the ongoing coronavirus outbreak, saying it expected regulated firms to have appropriate contingency plans in place to be able to deal with operational events arising from the spread of the disease.

“We expect regulated firms to have appropriate contingency plans in place to be able to deal with major operational events, should they occur, and we are working with the financial sector to ensure that firms are responding effectively to the evolving situation,” Gráinne McEvoy, the Central Bank’s director of consumer protection, said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times