Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

That is fine. As regards differential or dual pricing, I welcome the work that was done by the Central Bank and, in fairness, the engagement we have had in the past two yeas since I submitted a complaint. I also welcome the fact that the analysis is now being carried out, although I do have concerns in respect of how it is being implemented. I made a submission in that regard to the consultation that closed earlier in the year. I note that our guests made the point that the Central Bank wants to encourage discounts for switching purposes. In the context of car insurance and home insurance, 70% or 80% of customers stay with their provider. Unfortunately, they continue to renew instead of moving to another company. There are deposits, however. In the North and in Britain that is not allowed. I am sure our guests have read my submission. As all present are aware, the danger is that the premium gets loaded in the first year of renewal, so it is just basically truncated into 24 months. The company lures the customer in and then loads up the premium in the first year because it cannot do so thereafter. The problem is that people do not leave, as is also the case in the context of banking and financial products. I refer to what happened with Ulster Bank. It is now leaving the country. People could not access their money for several weeks but they did not leave and go to another bank. That is a problem. I have concerns in that regard.

I know the Central Bank is putting forward an argument that Ireland is different. To me, it is clear that in terms of motor insurance Ireland is a sub-market to Britain, in reality. The major insurance companies here are the same ones that are operating in Britain. I know the market is smaller here - it is smaller than the market in Manchester, for example - but I still believe we could have operated the same type of proposal that pertains there. Discounts still happen there. I am looking at a website offering insurance in the North. A driver living in Newry can get a 20% discount on a new policy if he or she goes online to get it or knows somebody with the same policy. Discounts are allowed for new customers but renewing customers, even if they are in their fourth year or fifth year, also have to get the same discount for that period. Insurance companies would still be allowed to offer that kind of market attraction but all customers who renew that month would also have to be able to avail of it. I put that on the record because I am concerned about this issue and it needs to be monitored very carefully.

Insurance companies are already changing the way they calculate insurance premiums. For example, Liberty Insurance has changed the way it calculates quotes. It now gives customers a quote that may be less than the premium for the previous year but it excludes windscreen cover, which has to be selected as an add-on, whereas previously it was included automatically. The companies have pared it down to the basics and everything else is an add-on. That can confuse people as to whether they are getting better value. We have to keep one step ahead in the context of the insurance industry.

I am bringing forward legislation and will be asking the Central Bank for its opinion on that Bill in a formal session. I want to take this opportunity, however, to make the point that the Personal Injuries Assessment Board, PIAB, has referred to a 40% reduction in claims. We know that a similar reduction has happened in the courts yet no reduction of that level is being passed on in any way to consumers. We were told that we had to let this wash through and would have to wait for a while. It is not happening. My concern relates to the fact that there has been a reduction in motor insurance. There is no doubt about that. We can see the statistics. This is what my legislation will address. Not everybody is getting reductions. I saw an insurance quote the other day that had doubled from €500 to €1,000. On average, however, the cost of insurance has reduced. There are several factors influencing that.

One thing we do not know, and the Central Bank cannot tell us, is whether the reduction in awards is being passed on in full to consumers. In Britain, all the major insurance companies that operate will have to provide a report to outline what premiums they would be charging if the reductions in whiplash awards had not come into effect, and the premiums they have been charging over the past three years, and that will have to be audited before they give it to the UK Financial Conduct Authority, FCA. Why can we not capture those types of data in the national claims information database in order that we can genuinely say the reason premiums have fallen relates to less traffic, better safety standards or whatever other measures have been taken into account, or whether it relates to the awards. Our guests might comment on that.

On the issue of switching between the banks, I welcome Mr. Kincaid's comments, which were an important intervention, suggesting the banks are not ready or up to the job at this point. We have concerns. Switching banks, for some people, will be very easy. They will be able to do so on their mobile phone if they do not have an overdraft. God help those people who have overdrafts because they cannot do that. They cannot even use the code but will have to agree it beforehand, or they will have to clear the overdraft, which many people will not have the resources to do. Many people will be caught out here. I am concerned the Central Bank, in its consumer protection role, is not stepping up to the level it should. The Governor should have met the CEOs of the banks. I can only assume from his response that has not happened. Two banks are withdrawing from the country and the Governor, I understand, has not met the CEOs. Three banks are going to receive about 1 million additional accounts over the coming years and that meeting has not happened. There is a problem there, in my view. That is no disrespect to our guests who have met the CEOs, or to Ms McMunn in particular, but this has to be dealt with at the highest level.

My understanding differs from something Mr. McKincaid said. He stated the obligations to their customers will remain on the withdrawing until they have been onboarded to new destinations or, as he went on to say, until they have been properly migrated to new accounts. My understanding is that is not what is going to happen. The banks will have that obligation for six months and, thereafter, they will be able to close the account and send a cheque in the post, and every direct debit will fail after that point. That is my understanding of the obligation KBC and Ulster Bank will have. If I am wrong, Mr. Kincaid might correct me. This is the problem. The Central Bank has done good work on the issue of phone waiting times, but there are people who, we are told, cannot get an appointment to talk about the overdraft they will need for five or six weeks. There will then be requirements relating to documentation, identification, the need for the bank to know its customer and everything else that takes place. Furthermore, we understand some of the banks are giving people two options, namely, to close their account and set up a new one or to use the code. People should be told not to close their account. We need a public awareness campaign to tell them not to close their account until everything is in order. I am concerned that people will be caught out and direct debits will fail.

Finally, in respect of the Irish Credit Bureau, no work has been done on the credit scores that apply when direct debits or mortgage payments fail as a result of customers not having the ability to meet them and the process that is not allowed. Ms McMunn stated the six-month period can be extended but, while I am glad if that is the case, I understand this is a statutory notice sent to customers to say the clock has started ticking and that six months later, the account will be closed. I was under the impression this is an official, legal obligation on the banks’ part. Does the Central Bank have the ability to instruct the banks to extend the period beyond that?