The Minister for Finance, Paschal Donohoe T.D., today (Sunday) welcomed a proposed initiative from the banking industry in Ireland that aims to start the process of rebuilding trust and confidence in the industry following the tracker mortgage scandal.
The five chief executives of the main retail banks: Allied Irish Banks, Bank of Ireland, KBC, Permanent TSB and Ulster Bank, have informed the Department of Finance of their intention to establish an Irish Banking Standards Board. This initiative, which is welcomed by Minister Donohoe, will be broadly modelled on the Banking Standards Board which operates in the UK. A strong customer focused culture is a key ingredient in a reputable, sustainable banking sector which supports Ireland’s economic development. It is also a critical driver of franchise value over time.
It is proposed that the Board will be made up of expert people from across civil society all of whom are committed to and focussed on enhancing competence, culture, reputation and trust across the Irish banking industry. The Board will be chaired by an independent non-banking individual who has the personal respect, credibility and trust of citizens. The initial step will be the establishment of a selection panel to hire the Chairman, CEO and Board. The cost and time involved in establishing this new entity should not be underestimated and it is envisaged that it will be operational in late 2018.
The Board will promote the highest ethical business standards by leading and overseeing the collective effort by the industry to raise banking standards. It will also seek to drive an improvement in culture across the industry and develop a banking industry code of practice. The initiative does not seek to replace or diminish existing regulation and will be run out of a separate entity to Banking and Payments Federation of Ireland (BPFI) and the banks. The establishment costs and annual running costs will be funded by the retail banks themselves.
Minister Donohoe stated: ‘In October I made it clear that the banks’ behaviour in relation to tracker mortgages was disgraceful. Following on from the recent publication of the Central Bank’s update on the Tracker Mortgage Examination I welcome this initiative by the current leaders of the banking industry and look forward to receiving more detail when the Chairperson and Board Selection process is formally launched by the 5 CEOs of our main retail banks in early February’.
Note to editors:
It is envisaged that the core functions of the Board will include:
- Promoting the highest ethical business standards by leading and overseeing the collective effort to raise banking industry standards;
- Driving a continuous improvement culture across the Irish banking industry for incumbents and new entrants by requiring participating banks to commit to a programme of improvement under the headings of competence, culture and customer outcomes;
- Setting standards of best practice by identifying activities where voluntary standards serve the customer and public interest and work with practitioners, regulators, government and other stakeholders to develop any required procedures;
- Developing a single banking industry code;
- Provide a best practice advisory role to assist banks in implementing and embedding new codes of conduct;
- Identify and champion excellence and good baking practice.