The Central Bank of Ireland has written to all regulated firms in the State such as banks warning them to treat customers fairly as they grapple with the cost-of-living crisis.
Colm Kincaid, the regulator’s director of consumer protection, wrote to the chief executives of regulated firms on Thursday to remind them of how they should behave with customers in accordance with the Central Bank’s Consumer Protection Outlook Report, which was published in March and developed asset of principles focused on the risks customers face.
Mr Kincaid warned the chief executives that financial institutions should strive to avoid causing customers “harm”. He said the cost-of-living crisis is causing huge change for customers and it is the “responsibility of firms to navigate this change in a manner that places the best interests of consumers at the heart of their commercial decision-making”.
Financial institutions were told they must have “sufficient operational resilience” to cope with the changed economic outlook without creating further risks for consumers. They were told to have enough customer service capacity, which would include call centre staff and online advisers, to meet demand for customers who may need to engage during the crisis.
Insurers were reminded to process claims “swiftly” while customer service staff must be properly resourced and trained, said the Central Bank. It told them that if a customer cancels cover to save cash, the company should engage with them to see if they are eliminating cover they might still need.
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Lenders were also reminded of their obligations to stress test customers’ ability to cope with interest rate rises of two percentage points or higher above the level at which they originally borrowed. Before selling anyone a financial product, said the Central Bank, institutions also must take into account the outlook for the economy and the impact that it might have on their ability to repay.
“Firms must ensure they have clear procedures for calculating consumers’ capacity for loss, to ensure they do not invest in products that are outside their financial capacity,” the chief executives of the institutions were told.
Regulated institutions were also reminded in an appendix to the letter to be careful when selling customers risky investment products: “Products that may have been considered suitable for sale to retail clients previously, may no longer be suitable in the current climate.”
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“It is important that financial services plays its part in supporting consumers to navigate this changing economic landscape,” said Mr Kincaid in a statement issued after it published the so-called “Dear CEO” letter.
“The letter we are publishing … highlights a number of areas to which firms should pay particular attention as they do so, in order to ensure that consumers’ best interests are protected at this time and recognising the multiple challenges consumers are facing.”
