The Central Bank was forced into an embarrassing mea culpa on Friday when it admitted it had got its figures wrong on the amount it charges financial services companies to fund a consumer protection scheme.
The State’s banking regulator manages the deposit guarantee scheme, which ensures that people’s savings are protected even if the bank in which they have their account goes bust. It is funded by the various deposit-taking institutions and pays out up to €100,000 per person in any one bank, building society or credit union.
In a contrite release, the Central Bank apologised after what it described as “calculation errors” were identified in the amounts it took from some contributors to the scheme – mostly credit unions.
Exacerbating the red faces at the bank, the Irish League of Credit Unions (Ilcu) said the regulator had only become aware of the issue when the credit union body contacted its offices on New Wapping Street on Dublin’s North Wall Quay. It said the Central Bank’s admission “follows on from representations made by the Ilcu on behalf of our member credit unions to the Central Bank in early December, where we pointed out the anomalies in the calculation of the deposit guarantee scheme contribution levies issued to credit unions”.
The good news for savers is that the scheme itself is not out of pocket as the extra amounts levied on some credit unions in two years – 2019 and 2020 – were balanced by undercharging of other contributors, according to the regulator, which cautioned that these were just initial findings and that it was still assessing the issue.
And while the amount involved – €253,000 – might sound significant, it amounts to less than 0.1 per cent of all the money collected to fund the scheme.
“We apologise for this and we understand and regret any inconvenience that may arise, for credit unions in particular, as a result,” the Central Bank said. “It is clear from our initial assessment, however, that the maximum undercharges/overcharges involved are not in any way significant in terms of the financial position of any individual credit union.”
According to the website of the Deposit Guarantee Scheme, the last three institutions to trigger claims on the fund were credit unions – Drumcondra and District (where about 4,600 savers received €12.9 million in 2020); Charleville (10,900 savers got €39.2 million in 2017) and Rush (9,700 savers got €22.3 million in 2016).