Watchdog to focus on credit and insurance corporations
Launching its annual report for 2006 today, the Financial Regulator said it was now focusing on dominant credit card companies and insurance corporations who are charging over the odds.
Mary O’Dea, the watchdog’s Consumer Director, said they were working towards increasing competition and transparency in both markets.
“The credit card market in Ireland is very, very small. Three companies - that’s AIB, Bank of Ireland and MBNA – currently hold almost 79% of the market in credit cards,” she said.
“The Financial Regulator can not require people to enter the credit card market and start selling credit cards at a better deal.
“[But] what we can do is make the market more transparent by providing this information and showing other providers the profitability available in the credit card market.”
She said recent research carried out for the regulator showed credit card interest rates in Ireland ranged from 9% to 18%
“That price differential should not exist in a very competitive market,” she said.
The survey also showed about half of all credit card users do not know what interest they are being charged.
“We will be combining transparency with information so that people can be much more savvy in terms of what they are paying, how much money they’re losing and how easy it is to switch.”
The Financial Regulator also issued a stark warning to banks and customers to get their houses in order ahead of an expected downturn in the economy.
The official watchdog said households are going to come under increasing pressure as debt levels soar and interest rate hikes hit hard those struggling to make repayments.
Patrick Neary, chief executive of the Financial Regulator, urged banks to crank their alert systems up a notch so people under pressure can be helped at the earliest stage.
“What we don’t want to hear is that people are encountering difficulties, that the financial service providers seem very remote and they’re only engaging in a very aggressive scenario when things really are bad,” he said.
“We think it’s extremely important that things tighten up a little bit and customers under strain meet their repayment obligations. We believe the banks and other financial services providers should engage earlier.
“Their systems and processes should trigger early engagement so things aren’t allowed to fester, so that people that are coming under pressure are encouraged to engage with the banks, the banks get in early and stop the problems getting worse at an individual consumer level.”
Mr Neary also insisted borrowers should not put their head in the sand if they are finding difficulties in meeting their repayments.
“It is important that there is early engagement where people come under pressure. Don’t let the problem fester,” he said.
“My advice to consumers is don’t go into denial, contact your financial services provider if you’re under pressure and see what options you have available to you to help minimise the impact.
“If you have a problem go in and talk to your financial services provider, go to your broker, get advice, see what you’re options are before you make any decision. But at least identify your problem and engage early.”
Launching its annual report for 2006, the Financial Regulator also said it was now focusing on dominant credit card companies and insurance corporations who are charging over the odds.
The financial regulator Patrick Neary talks of what institutions must do to protect consumers.
