Call to stop banks from ‘pushing’ products
THE Central Bank has been called upon to clamp down on banks who pressurise customers into buying their insurance products, which can cost thousands more than the cheapest available deals.
Homeowners can save up to €13,000 on house and mortgage protection insurance by going to an online discount broker instead of a bank, two new surveys exclusive to the Irish Mail On Sunday reveal today.
Broker Insuremyhouse.ie said it can undercut banks on home cover by as much as €5,000 over 25 years: ‘The differences in [home cover] prices were pretty staggering – in one case the difference between a broker and a bank was almost double, while in another the price difference amounted to €200 a year,’ said managing director Jonathan Hehir.
Online specialist LABrokers.ie also claimed its mortgage protection can be up to €13,000 cheaper over 25 years than those offered by banks.
Under the Consumer Protection Code, borrowers don’t have to buy their home and mortgage protection from their banks. But when consumers opt to buy cheaper policies elsewhere, banks come up with all sorts of excuses to reject them, according to the Professional Insurance Brokers Association.
PIBA boss Rachel McGovern said: ‘Members report that lenders are offering the feeblest of excuses to pressurise mortgage applicants into choosing the lenders’ own policies and prevent them shopping around. When you are depending upon a lender for a loan, you tend to feel you have little choice.’ PIBA member John Geraghty of LABrokers said he has submitted to the Central Bank ‘12 examples’ of undue pressure exerted on his customers by banks when they tried to buy insurance elsewhere. In one case the bank claimed the signature wasn’t right, or insisted the lender’s name should be on the document, when that isn’t the norm, he said. Prospective customers have had policies rejected because the ‘paper was too thin’, he added. PIBA also accuses banks of discouraging customers from buying cover elsewhere by implying the borrower may not be able to get the mortgage on time, saying it is impossible to get a cheaper policy or unnecessarily asking the borrower to prove the new policy isn’t assigned to anyone else. PIBA said 94% of its members believe consumers are unaware the Consumer Protection Code prohibits ‘contingent selling’ – making the sale of one product dependent on the consumer purchasing another. ‘What we would be saying to borrowers is to assertively take the first step and let the lender know you are aware that under the Consumer Protection Code you are entitled to shop around.’ PIBA also called on the Central Bank to intervene. ‘It is not the job of financial brokers to police lenders’ compliance with the Consumer Protection Code. The Central Bank is funded by the taxpayer... to carry out that function,’ said Ms McGovern.