The Central Bank of Ireland (“Central Bank”) recently issued a further update on its investigation into the sale of payment protection insurance (“PPI”) in Ireland. The Central Bank reports that over 35,000 policies were in breach of the Consumer Protection Code (the “Code”), and that €25 million is due to be refunded to customers. The Central Bank expects these numbers to rise as the review is not yet completed.
The mis-selling of PPI policies has proven to be a big problem in a number of countries. From a comparison with the UK PPI refund figures, it is possible that the number of mis-sold policies in Ireland could be as many as 80,000.
The Facts:
- Approximately 350,000 policies sold in Ireland since July 2007 are included in the Central Bank’s current review
- 11 firms (banks, consumer lenders and credit card operators) are in the process of reviewing their policies
- 20% of the policies reviewed to date (175,000) have been in breach of the Code
Customers will be contacted directly by the firms involved. If a consumer is not satisfied with the outcome, they can make a complaint to the Financial Services Ombudsman (“FSO”).
There seems no particular appetite in Ireland to follow the UK experience, where certain claims-management companies have engaged in questionable activities (such as taking large up-front fees and aggressive marketing) in the PPI refund process. There is, however, an awareness that PPI claimants will need to protect themselves against inadequate settlements and time delays. Unless consumers take action within six years of being sold PPI, they are likely to have left it too late to take an appeal to the FSO or to challenge a firm in the courts.
FSO Experience and Insurance Companies
The FSO has ordered nearly €400,000 of compensation to be paid out to customers of banks, insurance companies and investment firms in the first six months of 2013. Half of all complaints received by the FSO were in relation to insurance companies. The number of complaints about PPI rose by 150% and the majority of the complaints related to the mis-selling of PPI.
EIOPA Guidance
EIOPA has also recently issued an opinion on PPI consumer-protection issues. The opinion recommends that supervisors, including the Central Bank, analyse their national PPI markets. The background note to the opinion includes an interesting case study on Ireland, which highlights recent market problems in the sale of PPI including focus on eligibility instead of suitability, timing of information provision and the scope of ‘key information’. The case study also outlines issues that predate the Code such as sales practices, inadequate staff training and ambiguity regarding refunds on cancellation.
Contributed by: Eoin Caulfield
