Dear CEO letters: CBI reinforces consumer protection expectations in context of changing retail banking landscape

As highlighted in our previous publication, the protection of consumers amid the changing retail banking landscape (resulting from the scheduled exits of KBC Ireland plc and Ulster Bank Ireland DAC), is a top priority for the Central Bank of Ireland (CBI) this year. The CBI has now written to the CEOs of each large Irish retail bank, setting out its expectations in respect of identified core risks, and inviting them to a roundtable meeting to discuss how the firms are working together on these matters and ensuring protection of consumers' best interests. We have set out key highlights from this Dear CEO letter below.

Key highlights

The CBI's letter identifies the following five core risks: 

• notice periods
• application of the switching process
• new provider making commercial decisions in a manner that facilitates a customer making and executing a switch
• direct debit originators (DDOs) and/or other service providers
• vulnerable customers

The CBI expects retail banks to have sufficient plans, preparations and resources in place to respond to an unprecedented migration of accounts and to ensure continuity of customer service. It also expects sufficient notification periods and a focus on vulnerable customers (whilst highlighting that all customers are potentially vulnerable to the risk of making uninformed decisions or decisions that are not in their best interests, particularly during times of uncertainty and change).

The CBI also states that all of the existing providers' legal and regulatory duties remain in place until the customer has been properly on-boarded to another provider. The prospective new provider to whom that customer wishes to switch their account is also subject to all applicable legal and regulatory duties.

The CBI is also mindful of the operational issues that arise from banks needing to engage with other service providers, including DDOs. Therefore, in order to ensure a smooth and timely switch of a customer's account, the CBI has also written to the CEO of each such provider to reinforce their duty to take action to ensure this exercise is completed efficiently, and seeking details of their plans to do so.
In addition to convening the CEO roundtable in May 2022, the CBI will in Q2 2022 repeat its review of call wait times on customer support phone lines in the main retail banks.

Next steps

Financial institutions that are recipients of these Dear CEO letters should proactively engage with the CBI, and include the CBI's expectations in this regard in their regulatory and compliance plans.

For further information in relation to this topic, please contact Patrick Brandt, Partner, Kevin Allen, Partner, Christopher Martin, Of Counsel, Sian Langley, Knowledge Lawyer or any member of ALG's financial regulation team.

Date published: 11 May 2022