Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

All credit institutions in Ireland are independent commercial entities. I have no statutory in respect of the charges applied by them. Section 149 of the Consumer Credit Act 1995 requires that credit institutions, prescribed credit institutions and bureaux de change must make a submission to the Central Bank if they wish to introduce new customer charges or increase existing customer charges in respect of certain services. Section 149 does not cover interest rates; it applies to fee and commissions only. The Central Bank may direct the institution not to impose the new or increased charge or it may approve the charge or approve at a lower level than requested by the institution. Once approved, the bank is entitled to impose the charge.

My Department published a report on the review of the regulation of bank fees and charges in December 2013. This contained a detailed description of the process by which the Central Bank makes decisions on whether to approve proposed charges. It is available on my Department's website, www.finance.gov.ie. Among the key findings of the review was that while fee and commission income has become a more important source of income to the banks in recent years, net fee and commission income in Irish banks was well below the average of their European peers.

The review also found that competition in the banking sector has reduced significantly since the onset of the economic crisis. This lack of competition means that the removal of section 149 would give unfettered price setting power to the incumbent and, therefore, it was recommended that it not be repealed. The Central Bank Supervision and Enforcement Act 2013 introduced changes to section 149 to attract new entrants to the banking sector. There is some evidence of improvements in the sector with a number of institutions introducing new products and adapting their business model.

The website of the Competition and Consumer Protection Commission lists the various charges imposed by the various financial institutions for different transactions - www.consumerhelp.ie. Institutions have varying models for charges and have different regimes and conditions under which they are wiling to grant transaction free banking.

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