Central Bank fails to protect consumers, warns FG thinktank
■ Customer interests are coming a poor second to industry, it says
CONSUMERS are being let down by the financial watchdog which is too focused on the needs of the industry, according to a scathing new report by Fine Gael.
The report was launched by Finance Minister Paschal Donohoe, and is strongly critical of the role of the Central Bank in protecting consumers.
The report was written by a thinktank set up and operated by Fine Gael to come up with policies, the Collins Institute.
It says the tracker mortgage debacle is the latest example of the Central Bank failing to convince that it acts in the interests of consumers.
The report argues the role of regulation appears to have been dominated by the demands of the financial services industry, rather than the needs of the consumer.
A spokesman for the minister did not rule out the creation of a new agency dedicated solely to protecting consumers.
The role of consumer protection has sat in various government agencies at various times. It is now split between the Competition and Consumer Protection Commission and the Central Bank of Ireland, according to the report on the need for better financial literacy for citizens.
“The Central Bank, in particular, has struggled to convince that it is acting in the interests of the consumer, with the tracker mortgage debacle being the latest area of concern, and the pricing of some licensed lending being clear examples.”
Lenders have owned up to nearly 34,000 tracker over-charging cases, at a total cost of around €1bn, after the Central Bank persuaded 15 lenders to go through their books to find cases of over-charging. It is one of the biggest over-charging scandals to hit the country, but more cases are expected to emerge.
The Central Bank regulates licensed moneylenders – who are allowed to charge up to 288pc in interest.
Some 350,000 people were customers of high cost regulated moneylenders in 2017, despite the economic recovery.
The thinktank said it could not find a single authoritative source of personal finance information in this country, in what is a stinging criticism of the websites of the Competition and Consumer Protection Commission and the Citizens Information Board, as well as the Central Bank.
Asked his view of the fact the report suggests State agencies are more concerned about supporting institutions than citizens, Mr Donohoe insisted the Central Bank and other agencies have now improved. “That has been rebalanced.” A spokesman for the minister later added, when asked if he wants a new consumer body: “This Government and the previous one acted to rationalise the number of State agencies and bodies, and the justification for the creation of another body in this area would need to be convincing.”
There was no answer to an emailed question asking if the minister agrees with the Collins Institute criticism of the Central Bank. In his speech, Mr Donohoe said financial literacy scores in Ireland are low, which carries a real cost for consumers.
The report calls for an online personal finance course to be made available to citizens, and funded by banks and other financial firms.
‘Equipping Citizens to Deal with Financial Choice’ recommends that the course be carried out by an independent Government agency, not the Central Bank. The report says financial literacy is fundamental to our well-being as a society.
Fine Gael said the thinktank is supported by it, but operates independently of the party.
All papers published by it are intended for discussion purposes only and do not represent Fine Gael policy, the Collins Institute said. The thinktank is chaired by Marion Coy, a former president of the Galway-Mayo Institute of Technology. Dr Coy has produced reports in the past on Fine Gael electoral strategy.