Brian Cowen (Laois-Offaly, Fianna Fail)

I should perhaps clarify the context in which the recent report was published and the views of interested parties sought thereon. The report published by the Competition Authority last December was one which had been prepared for it by a firm of consultants. While endorsing the analysis in the report, the authority has not yet taken a position on how best to remedy the issues it raises. Instead, it invited interested parties to give the authority their responses. It is only after it has considered these responses that the authority will issue its own report and recommendations — probably around the middle of this year. Given these circumstances, the response which I sent to the authority was a preliminary one and this will be reviewed in the light of the finalisation of the authority's position on the issues raised in the report.

The report which was published contained 40 recommendations, ten of which were directly addressed to my Department. A particular focus for my Department related to stamp duty on plastic cards. The recommendations on this topic dealt with the issue of the double stamp duty burden on persons in a year in which they switched card providers or upgraded or downgraded the status of the card provided by their existing supplier.

I had already indicated in my budget speech last December that I would take steps to eliminate this double charge and section 128 of the Finance Act 2005 provides accordingly. It amends Part 9 of the Stamp Duties Consolidation Act 1999 to provide for an exemption from a second or subsequent charge to stamp duty for financial cards such as credit cards, charge cards, ATM cards, Laser cards and combined cards arising from the switching of accounts within a financial institution or from one financial institution to another in the same year of charge. The change for credit cards and charge cards took effect from 2 April 2005 while the change for ATM cards, Laser cards and combined cards will take effect from 1 January 2006. These measures will have an important impact in addressing the issues raised in the Competition Authority's report relating to facilitating account switching.

A second area of particular interest to my Department concerned the recommendation that the regulation of non-interest bank charges be phased out. As pointed out in the response which I forwarded to the Competition Authority, the regulation of non-interest charges and fees is aimed at consumer protection. It facilitates the Irish Financial Services Regulatory Authority both to verify that notified charges are being applied to customer transactions and to require restitution in the event of overcharging. A reconsideration of the present arrangements would be warranted only in the context of a compelling case being made that these provisions significantly deter new entrants to the markets for these banking products or that the effectiveness of competition in the sector had increased considerably.

There were some other issues in the report for my Department to which I have also responded. The full text of the response is on my Department's website at www.finance.gov.ie. As to my views on the matter, I welcomed the report when it was published. It deserves careful consideration by all those concerned. The report's overall conclusion that there are competitive issues to be addressed in the banking sector leading to higher costs for customers must be taken seriously. My Department will pay particular attention to any recommendations relating to the legislative framework governing financial regulation.

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