Banking Update, October 2013

Author:Ms Christine O'Donovan, Fionán Breathnach and Catherine Allen
Profession:Mason Hayes & Curran

Welcome to our Banking Update (October 2013). This Update highlights a selection of financial services regulatory and administrative law developments as well as considering topical issues for the financial services industry which have been the subject of media attention during over the past few months. We hope you find this update to be informative and useful and if you have any queries or require additional information please contact the authors listed below.


The Houses of the Oireachtas (Inquiries Privileges and Procedures) Act 2013 came into force on 25 September 2013 and paves the way for a banking inquiry. The Act provides a statutory framework for the Oireachtas to conduct inquiries within the current constitutional framework on parliamentary inquiries as set down by the Supreme Court in Maguire v Ardagh [2002] IR 387.

The Act allows for inquiries into the conduct of members of the Oireachtas in their capacity as officeholders, and also provides powers to hold to account the government of the day or any person who has consented to Dáil scrutiny in their contract or through a statutory appointment. The Act will facilitate a banking inquiry to go ahead, and the Minister for Public Expenditure and Reform, Mr. Brendan Howlin T.D., has said conducting a parliamentary inquiry into the circumstances of the bank collapse was the best way forward as "no other possible models have been successful at meeting the public demand for a full account of this issue".

For further information, please see our recent article on The Inquiries Act.


The 'Anglo' tapes issue has brought some of the more dramatic consequences of 'call-recording' to the fore. Most banks, as well as some other financial services providers, operate automated telephone recording systems for customer service desks and when transacting customer business by phone.

Access to telephone records may arise in a number of ways, which financial services organisations should be aware of so that they can structure their systems with this in mind to comply with all applicable laws and regulations.

Below is an overview of the requirements relating to call-recording as well as some other implications financial services providers should bear in mind.

Customer Protection Code

Call-recording has become accepted practice over the years and this practice has been acknowledged by the Central Bank of Ireland (the "Central Bank") in the Consumer Protection Code, 2012 (the "CPC").

For financial services providers interacting with consumers1, telephone contact must only be made in accordance with the CPC and when doing so, the relevant entity must, amongst other things, immediately inform the consumer that the call is being recorded, if this is the case.

Financial Services Ombudsman (the "FSO")

Where regulated financial services providers do not record telephone calls with customers, they may be at a disadvantage where a customer makes a complaint to the FSO2 relating to a product or service sold over the telephone.

The 2007 Annual Report of the FSO encourages call-recording by financial services providers with the then Financial Services Ombudsman, Joe Meade, noting that when:

"dealing with a complaint that hinges on contractual commitments entered into by telephone, [he] would be disposed to find in favour of a Complainant where the Provider could not provide the necessary evidence to rebut the claim being made. It would therefore be in the interests of the Providers to consider retaining appropriate records - including, where necessary, 'phone recordings relating to such contractual commitments - for the period within which a person can complain to me i.e. six years."

The 2007 Annual Report of the FSO also states that the Data Protection Commissioner (the "DPC") was consulted by the FSO and that the DPC did not see any difficulty with financial services providers retaining personal data including telephone records in such circumstances. The DPC pointed out that it would be important that financial services providers comply with their other obligations under data protection legislation as discussed below.

Data Protection Rights

Under the Data Protection Acts 1998 and 2003 (the "DPA"), it is accepted that there can be a legitimate business interest basis for call-recording in business critical areas, provided that callers be clearly informed that the recording is taking place. The caller can then choose to continue or terminate the call.

The DPA (s.4) entitles individuals to access his/her personal data held by a data controller, i.e. financial services providers. An individual could, for example, be a bank employee or customer. On request, the individual is entitled to receive 'in an intelligible form' (i.e. a form that is capable of being understood) his/her "personal data".

Data controllers are obliged to search all of their electronic systems including audio recordings and relevant paper-based filing systems for his/her personal data.

"Personal data" means any data relating to a living individual who is identifiable from the data or from the data in conjunction with other information that is in, or is likely to come into, the data controller's possession. This encompasses a wide range of information, such as name, address, date of birth, passport number, credit card number, last time/place credit card used, geographical location and bank account details.

In 2002, the DPC considered a complaint by an individual who stated that, in the course of her employment for a particular company, she received a call from one of the major international banking organisations based in Ireland. During the call, she heard 'pips' on the line and, on enquiring, was informed that the call was being recorded but no explanation for the recording was given by the person representing the bank.

The bank stated that, in line with industry practice, it operated an automated call recording system. The recording system listed details of particular calls made at a particular time, to or from a particular telephone number. The bank initially disputed whether the recordings contained data relating to an...

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