Brokers accuse lenders of being 'predatory'
THE Central Bank has been called on to stop banks putting pressure on customers to buy investment products when bank officials spot that customers have a lot of money on deposit.
Broker body PIBA (the Professional Insurance Brokers Association) accused banks of an abuse of the money transmission system.
The organisation has now started to log details about the practice. "Banks are in a privileged position and are abusing this by aggressively targeting clients using information gained from actively monitoring clients' bank account transactions," PIBA told the Central Bank.
Consumers were being exposed to predatory commercial practices by banks, the broker body said.
The practice should be outlawed as part of the review being carried out at the moment by the Central Bank into the consumer protection code, a set of rules on how finance firms are to treat consumers.
"We call for a direct prohibition in the code on credit institutions using client account information gleaned from the operation of the money transmission system for the purpose of promoting insurance or investment products and services to clients," PIBA said in a submission to the Central Bank.
The submission contains a number of examples of banks trying to persuade customers to invest in investment products.
Banks were accused of approaching customers directly when they saw a new direct debit being set up, particularly for a life or pensions policy. The banks attempt to get the customer to invest in one of the bank's products instead.
Asked if banks were operating in an unethical way, a spokesman for the Irish Banking Federation said the matter was for the Central Bank to deal with. "It is for the regulatory authorities to consider any substantiated concerns about the operation of the money transmission system.
"Along with other financial institutions, banks successfully process through that system hundreds of millions of payment transactions each year on behalf of their customers."