Lenders query regulators' plans to protect vulnerable
PLANS by regulators to give greater protection to "vulnerable" consumers, such as the disabled and the elderly, have been questioned by banks.
The Central Bank wants to protect these people from being sold unsuitable financial products. It wants banks and insurance companies to carry out greater checks if vulnerable people are being sold a product.
Regulators have proposed a list of 10 criteria where someone could be classed a vulnerable. This includes older people, those who are heavily indebted, those with low incomes and the recently bereaved.
Central Bank bosses want vulnerable customers to be intensively questioned to ensure they fully understand what they are signing up for.
The issue of older people being exploited by financial institutions has been raised repeatedly by former financial services ombudsman Joe Meade, who campaigned for older people to be treated fairly.
But banks have reacted negatively to the proposed changes to the Consumer Protection Code, a rule book on how consumers are to be treated.
Bank of Ireland questioned "the feasibility of applying what is currently set out in the code in practice" when it comes to vulnerable customers.
The Irish Banking Federation said that the 10 criteria used to define vulnerable customers was too "rigid".
It said that the need to fully investigate such customers' circumstances could be considered intrusive and insensitive.
The Free Legal Advice Centres, a body that provides advice to consumers, welcomed moves to protect those who can be easily exploited by finance houses.
But it noted: "However, it is unavoidable comment that there is a very strong sense of 'closing the stable door after the horse has bolted' about this consultation."
The Central Bank is considering 52 submissions and will publish a strengthened Consumer Protection Code later this year to replace the existing four-year-old code, which it accepts has not succeeded in stamping out the exploitation of vulnerable customers.