The submission by the Competition and Consumer Protection Commission (CCPC) on the Department of Finance’s review of problems in the banking system is no exercise of introspection.
Rather than outlining what it could do to help boost competition in the sector as Ulster Bank and KBC Bank Ireland exit stage left, the watchdog devotes its 33-page tome to pointing out what others should do.
The submission, published this week, calls for an amendment to the Central Bank’s mandate to give it a role in promoting competition in financial services, alongside its current regulatory focus on prudential and conduct supervision and consumer protection.
Set up a sandbox
It also called on the Central Bank to set up a so-called sandbox for innovative firms to test new products and services on a small scale in a relaxed regulatory environment – and for the bank to issue a guidance note for fintechs seeking authorisation, amid concerns that its processes for clearing new firms are slow and arduous.
And the watchdog urged the department, as part of its review, to compare the now small number of full-service retail banks in the Republic with similar-sized economies, to establish a benchmark of the concentration in the sector relative to peers. It’s something you’d think the CCPC should be doing.
But the body’s call for a more efficient use of suspended repossession orders by courts to resolve deep-in-arrears mortgage cases is worthy of consideration – especially when difficulties in enforcing collateral in the State are seen as a potential barrier to entry to the Irish banking market. They also contribute to the high capital requirements, and mortgage rates, here compared to most of Europe.
While UK courts typically use suspended repossession orders early in the legal process, to hold borrowers to court-mandated solutions for debt in default, the consumer watchdog noted that Irish courts, which have had the same powers for more than a decade, tend to repeatedly adjourn proceedings in the hope that borrowers and lenders will reach some sort of deal.
As of the end of last year, over one-third of the 6,257 problem owner-occupier home loans that were part of the legal process had been stuck in the system for more than five years. That’s hardly a great situation for anyone involved.
