Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Minister for his response, which is quite similar in nature to the response given on the Minister's behalf by the Minister of State, Deputy Harris, last night during the Private Members' debate. The problem I have with the response is that the Minister did exert pressure on the banks back in 2011, in a very public way, when there was an ECB rate reduction and the pillar banks did not initially pass that reduction on to customers. The pillar banks were called before the Economic Management Council and the Minister and the then Minister of State, former Deputy Brian Hayes, made strong comments and at least one of the banks subsequently passed on that rate reduction to customers.

The Central Bank is not just the prudential supervisor of the banks and the regulator. It is also the consumer watchdog. Take Bank of Ireland as an example. Last November, it told the Joint Committee on Finance, Public Expenditure and Reform that its cost of funds is 1.15%. Its standard variable rate for existing customers is 4.5%. That is extortion by any measure. That level of a margin being applied on a particular group of customers is unfair. There has been some downward movement on variable rates, but a number of the banks excluded their existing customers from benefiting from that reduction. This is unfair and should be addressed. They have given the reduced rate to new customers, but not to existing customers who form part of the 300,000 customers affected.

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