The Minister for Finance published the Report arising from the year-long Retail Banking Review yesterday, 29 November 2022, following its consideration at Cabinet.
The Report makes 34 recommendations, and the Report confirms that "the recommendations...are now Government policy".
Recommendations involving legislation
The recommendations are wide-ranging. A number are likely to involve new legislation/amended regulations, including:
- Legislation requiring providers of credit to SMEs to be authorised and supervised by the Central Bank.
- Amendments to the SME Regulations to take account of planned changes to the Consumer Protection Code (CPC) (the Central Bank has also been asked to review the guarantee-related provisions of the SME Regulations).
- Amendments to the Central Credit Register framework, including a reduction in the reporting threshold from €500 to €200.
- The relaxation of remuneration restrictions for staff of AIB, BOI and PTSB to allow variable pay of up to €20,000 per annum per employee and the provision of standard non-pay benefits. The €500,000 salary cap per individual will be removed for BOI.
- Legislation requiring banks to provide 'reasonable access to cash' with the aim of keeping access to cash at December 2022 levels for the time being. ATM operators and cash-in-transit firms will also be brought into the Central Bank's authorisation and supervisory remit.
Consumer Protection Code Review
The Central Bank has been asked to incorporate some additional work into its ongoing review of the CPC. That includes:
- Increased minimum notice periods for significant banking service changes (to be raised to 4 months) and for branch closures and market exits by banks (to be raised to 6 months).
- A requirement that providers of retail banking products design and publish customer charters with service standards (those providers are being asked to do this on a voluntary basis in the meantime).
- A requirement for banks to submit robust, board approved, assessments to the Central Bank when they plan to significantly alter services provided through branches or when planning to close a branch. Those assessments should also be published (with commercially sensitive information redacted).
- A requirement for ex-post assessments by banks, to include a survey of impacted customers, 9-15 months after a change or closure.
For more information on the Central Bank's review of the CPC, read our recent insights here: Consumer Protection Code: Central Bank publishes Discussion Paper
Other Key Recommendations
Among the other recommendations are:
- That the Central Bank review its authorisation and approval processes with a view to identifying improvements. The Report notes that the review should reflect the importance of the “continued flow of high quality new entrants to the financial services markets, while also recognising the importance of gatekeeping activities in mitigating risks to protect consumers and the economy”.
- That the Department of Finance consult with mortgage lenders and the Central Bank to see if the lenders can be more transparent about composition of variable mortgage rates.
- That the Department of Finance and the Central Bank look at initiatives in area of mortgage switching.
- That the retail banking sector prioritise looking at how to expand products and services to help consumers and SMEs transition to a lower carbon future.
"The Review makes 34 separate recommendations to be implemented by the Department of Finance, the Central Bank of Ireland and the retail banking sector itself. Implementing these recommendations will deliver real benefits for consumers and SMEs and help ensure that the sector continues to fulfil the critical function it plays in our lives and our economy fairly, equitably and effectively.”