BIG bank bosses have agreed with the central bank to improve their handling of the closure and transfer of up to a million accounts due to Ulster Bank and KBC’s exit from the market.
Here it was warned that the closure of banks and the transfer of customer accounts to existing market participants could end in disaster.
At the meeting, the heads of the five major banks agreed on the need for better bank switching planning, more customer-centric design and better communication with customers.
It was also agreed that a system-wide commitment is required.
This is a step towards establishing a forum where banks join together as a group with other stakeholders to allow problems to be anticipated and resolved.
Regulators invited banks to the meeting after asking the central bank to “stick its finger”.
This is to avoid that the closures of the two banks and the massive account switching become a disaster. Around a million accounts have to be converted.
These include checking accounts, savings accounts, and business accounts.
Around seven million individual direct debits, recurring card payments and transfers could be affected by the mass migration of customers to new providers. This includes consumer and business accounts.
Michael Kilcoyne, the leader of the Consumers’ Association of Ireland, had said the massive account closures risked turning into a “chaos” and urged the central bank to intervene.
He urged “putting your finger out” and doing more to prevent the closures from becoming a “disaster”. He called for the establishment of a supervisory committee made up of banks and regulators.
Just weeks later, the central bank convened KBC and Ulster Bank for a meeting, along with the remaining banks, AIB, Bank of Ireland and Permanent TSB.
And a new steering committee made up of banks and regulators is to deal with logistical issues relating to the massive account switching and account closure campaign.
At the same time, Ulster Bank and KBC Bank Ireland have been warned by the regulator that unless substitute banking services are put in place for their customers, they will be prevented from exiting this market.
The central bank told the exiting banks that it should step up its oversight over the planned exits, in what has been described as a massive upheaval in financial services.
The regulator warned Ulster and KBC that it will “intervene to the fullest extent of its powers if banks fail to execute switch requests “in a timely manner” to ensure continuity of customer service. This has been interpreted as a warning that unless new banking services are offered to customers, it will prevent banks from exiting this market.
The banks were instructed by Central Bank Director General Financial Conduct Derville Rowland,
Mary-Elizabeth McMunn, Director of Credit Institutions Supervision, Colm Kincaid, Director of Consumer Protection, and Gerry Cross, Director of Financial Regulation.
Ms Rowland said after the meeting that KBC and Ulster Bank must accept that their customers affected by the closures have not asked to be in this situation.
“They have rights that need to be protected and expectations that need to be built through their relationships and interactions with the banking system that need to continue to be met as this exercise progresses,” she said.
She added that the Irish banking system faces a challenge in ensuring that bank account migrations go well.