Banking Industry either misunderstands switching code or is misinforming direct debit originators to the detriment of customers - Pearse Doherty TD
Sinn Féin spokesperson on Finance Pearse Doherty TD has criticised the banking industry for failing to have systems in place to ensure a smooth switching process for Ulster Bank and KBC customers.
This comes after the Central Bank wrote to the Donegal TD contradicting comments made by the Banking and Payments Federation to the Finance Committee and Direct Debit Originators that updated customer details had to be communicated solely by paper.
Teachta Doherty warned that these failures risked chaos for switching customers in the months ahead.
“Last month Electric Ireland came before the Finance Committee and told us that banks were sending them updated customer account details by post and post alone.
“Electric Ireland warned that this paper-based communication threatened the smooth processing of updated details for customers that are now leaving Ulster Bank and KBC.
“It is slow, onerous and more prone to error.
“As the two banks leave the market, more than half a million customers will have to switch bank.
“And as part of this, direct debit originators will have to receive their new bank details to ensure payments are not missed and credit ratings badly affected.
“As part of the Central Bank switching code, banks must contact direct debit originators, such as phone companies or electricity suppliers, to provide them with a customer’s updated details.
“Last month the Banking and Payments Federation came before the Finance Committee and told us that, under the switching code, banks were required to conduct all communication solely by paper.
“They have been telling direct debit originators like Electric Ireland the same.
“Last week the Central Bank confirmed to me in writing that this is false - communication between banks and direct debit originators can be automated or electronic.
“But the banking industry is misinforming direct debit originators that it must be done through paper – for more than half a million customers.
“Either the Banking and Payments Federation do not understand the switching code or they deliberately misled the Dáil and Direct Debit Originators – which is it?
“That there is not a seamless and automated switching process available to customers, when the banks have known this was coming for a year, is totally unacceptable.
“In my view it suits them to make this process difficult, to tighten their grip on customers and reduce competition.
“It is clear that the Minister for Finance now needs to intervene.
“It is truly shocking that the representative body of the banking sector does not understand the switching code or is misinforming direct debit originators.”