Professor Philip Lane:

Many markets have this characteristic of discrimination. When they can do it, firms like to differentiate in pricing across different groups. I fully understand the perception that it is unfair, if one has been in that position. At the same time, the Central Bank will hold to the position that banks have to be run on a commercial basis. We can discuss the level of competition in the banks and whether the existing high rates are likely to persist, but the Central Bank cannot interfere in the contracts between lender and borrowers.

The Deputy mentioned switching. I agree that there is not a lot of switching taking place. The Central Bank's research indicates that there are more options than one might think where households could benefit from switching. One of our goals is to make the switching process easier. In the same way as mobile phone contracts and so on, the more one makes it easier for customers to switch phone company or bank, the less a company or bank will be able to separate existing customers and charge them a high rate. The Central Bank can work on making the switching process easier. However, on insisting a bank treat new and existing customers the same, that is not really within our power.