Gerald Nash (Louth, Labour) | Oireachtas source

The Labour Party welcomes the Bill. Much of what it contains aligns with the comprehensive submission we made in reference to access to cash in the context of the banking review a couple of years ago. We are happy to support the Bill and its principles. There are elements that we are concerned about and that we will tease these out on Committee Stage, but the premise of the Bill is sound.

It is important that we get some legislative protections in place in order that people can continue to have access to cash and be confident that they will have this access in perpetuity. Cash is king, as the saying goes, for many people, but there is no doubt that the whole landscape relating to money - how we spend it, how we make transactions and who financial services in general operate - has changed dramatically in recent years. This is due to the wave of digitalisation that has taken place in this country and elsewhere. On the whole, the latter is not necessarily a bad thing. Digitalisation and new technologies should be embraced. For many of us, they makes things more convenient by saving us time. They make information more accessible and make it easier for many of us to communicate. As we know, people are increasingly doing their shopping or accessing their entertainment online. All of this has implications for how society is organised and how culture is accessed, with implications for our village, town and city centres.

There has been a considerable amount of change over a very short period in recent years. There is little doubt that the majority of people have embraced digitalisation and electronic banking for payments and spending. The data on this is plain to see. The decline in the use of cash, even since the advent of Covid, has been noticeably marked, but we can go back further and see the same trend playing out over the years. Data from the Central Bank shows that the value of monthly card transactions has almost doubled since 2015. ATM withdrawals have gone from being around half to being approximately one seventh of card transactions. Perhaps the most telling evidence that the digital revolution in our spending habits is well under way is the explosion of e-commerce, which has grown by in the region of 300% over the same period.

Quite clearly, card services and other digital or online payment services are the preferred method of most people now. There is a real risk that we are putting the cart before the horse in how we respond to this as a society, however. The Minister of State will recall the attempt by AIB to remove cash from 70 of its branches in 2020. This caused considerable legitimate and valid unease across the country. The response reflected how vital a resource cash remains for many people.

In recent years, we have also seen sinister attempts by service providers and businesses to restrict the ability to use cash. We are all seeing more and more signs at cash registers saying "Card payments only". You see them all around the place and not just in major cities and towns. Frankly, that needs to be stamped out. I need to go through the legislation again to identify whether there are provisions in place to address that particular phenomenon. We have all stood behind people who we were embarrassed for when they were turned away from accessing the service they wanted or from buying the product they wished to buy or the meal they wanted to have because they did not have a card or did not have a card on their phone, that is, they did not have electronic means of paying. They prefer to pay in cash and want to do so. The GAA, which Deputy Ó Murchú mentioned, the NCT, Irish Rail and a few others have been rightly criticised for attempting to remove the ability to pay with cash. We can be thankful that they rolled back on those attempts or that at least most of them did. We need to be forceful in pushing back against businesses and services that try to force people into non-cash transactions. I know we are technically discussing access to cash here but the ability to actually use that cash is the important point. The Minister of State will understand the logic there.

In a similar way, people should not be punished for choosing to use cash over other methods. We are seeing what effectively amount to penalties for cash use where services offer discounts for non-cash payments. While we all support the Leap card initiative for reasons that are understood, it is an example that springs to mind.

We cannot assume that everyone has kept pace with the recent strides towards a cashless society. We are all aware that not everyone favours this way of going about their business. Our banking and payments systems must reflect that. There remains a strong need for cash among certain cohorts. We have to be cognisant of that fact. Perhaps the most obvious example is one that other speakers have touched on, that is, older people who may not be as technologically literate and digitally confident as some others. As the Minister of State will know from her role as Minister of State with responsibility for older people, cash is a vital resource for older people and their access to it and ability to use it must be protected.

Having said that, and as other Deputies have said, the main driver and issue here is people experiencing poverty. There is a direct correlation between those who experience poverty and cash use and that needs to be understood. In its contribution to pre-legislative scrutiny of this Bill, Age Action noted that this is an issue of social exclusion. That is what it fundamentally is. As the digital and online worlds become more and more embedded into our social and economic fabric, those who cannot, for a variety of reasons, keep pace are being left behind. Age Action went on to note that three in ten older people do not use the Internet at all while a further three in ten have below basic digital skills. The rush towards online and digital banking therefore poses a serious threat to their ability to safely and securely manage their financial affairs. For a good number of years, we have been calling for a national financial literacy strategy. This was reflected in the banking review report. To be fair, I know it is something the Minister is committed to.

On a related matter, there is also the issue that many people simply do not trust the new and emerging online banking services and not without good reason. We will all have heard of the various phishing scams. We have represented people who have been caught up in those scams. It is often those who are not as digitally literate as most who fall prey to those scammers. We have all received those text messages on our phones but some people respond and act when they receive them. We all know the consequences of that.

For all its progress in recent years, digital banking is still a new and emerging technology. There is still a lot of work to be done before people will have full confidence in the infrastructure's ability to protect people and their finances. Cybercrime and IT failures remain very real threats. We should not be forcing people to simply accept these risks as we remove their access to cash. Access to cash is a protective measure in and of itself. It makes people feel more secure.

I do not want to give the impression that protecting cash is just a matter for older people. That is not the case. There is still a genuine appetite for cash. A European Central Bank survey from December 2022 found that 64% of people in Ireland felt it important to have the option to pay in cash. The Department of Finance's consumer banking survey of 2023 reports that almost a quarter of people prefer cash transactions. Others have mentioned the importance of cash to those on lower incomes. It is an important budgetary measure for them because cash is often easier to control and makes it easier to keep track of spending than online banking or using a card. It is vital that this ability is maintained. Access to cash is really important to allow those who are on low incomes to manage the limited resources they have.

I will also raise the importance of cash for victims of domestic abuse. Financial and economic abuse often goes hand in hand with physical or emotional abuse in domestic situations. Digital and online banking makes it a lot easier for perpetrators of abuse to monitor and control their victims' access to and use of money. This severely hampers the victims' ability to escape the dangerous, damaging and horrendous situation they may be in. Sometimes, the victims may not even have access to their own bank accounts, making access to cash even more vital.

Ultimately, what we are talking about here is the protection of choice, the availability of banking services and infrastructure, the option to choose to move towards digital banking and spending, and the ability to continue to use traditional cash payments and person-to-person services or to make use of a mix of both, which is what most people do. I have serious concerns that choice and the availability of in-person services is being more and more restricted in the banking landscape more generally, not just as it relates to cash versus non-cash. We have seen the gutting of banks' local branch networks in recent years. Together, AIB and Bank of Ireland have closed hundreds of branches and not just in rural areas. While the availability of online and digital services is to be welcomed, it should not come at the expense of bricks and mortar branches, which remain valuable assets for customers and communities.

Furthermore, in cases where branches remain open, we know that the range of services is reduced. As opposed to over-the-counter services, there has been a push among retail banks towards automated services within branches, something that may not suit the needs of all customers. How many times have we been in bank branches using the digital services that are there and finding that several people are available to help people who might have difficulty with those digital services? I often wonder whether they do the kind of time and motion studies that should be required to make these decisions because a human being is always required to support people in difficulty, whether in a retail setting when buying your shopping and putting it through the scanner or whether in the bank when the digital service fails you.

The banking review recommended that banks should be required to submit assessments to the Central Bank if they are planning to significantly alter their services in branches or to close a branch entirely. The Labour Party would certainly endorse that. We have been saying this for many years. We are all too familiar with the level of support the Irish taxpayer was forced to provide to the Irish banking sector a number of years ago. The sector does not show the same interest, or the kind of interest it ought to, in Irish society. There should be very serious thresholds set by the Central Bank where a retail bank is considering closing any branch in this country at any point. Social and economic assessments should be undertaken and only if the Central Bank is satisfied that certain thresholds have been met should consent be given for a bank to close a branch.

This phenomenon is not unique to the large retail banks in this country. As Deputy Ó Murchú raised earlier on and as we both raised in the House yesterday in another context, there is an issue regarding the unilateral decision of the executive and senior staff of a significant credit union network in County Louth to close two branches, one in the village of Kilsaran and another in the village of Clogherhead. Members were not consulted about that. Even though the case was not presented to the members, the defence offered by those who took the decision was that the services have moved online.

The credit union registrar should be introducing the same kinds of thresholds and criteria that we want the Central Bank to introduce when it is going to consider the decisions taken by major retail banks to close branches. The credit union regulator should be applying the same principles to credit unions. These are organisations founded on democratic principles. When it suits them, they set those democratic principles aside. We need to be mindful of this point more generally.

Broadly speaking, the erosion of the choice and availability that we have in Irish financial services was, of course, compounded by the recent withdrawal of KBC and Ulster Bank. Conditions in the global banking industry have made it difficult for new banks to enter the Irish market and there are uniquely domestic conditions that militate against this happening. Of course, this all stifles competition and means there are fewer choices for Irish consumers. This leads to higher interest rates, higher mortgage interest rates, a lack of competitive savings products and so on. It does engender a very real risk of a real duopoly emerging in the Irish market between AIB and the Bank of Ireland, with Permanent TSB somewhere way behind. This is just one of the reasons we in the Labour Party support the development of a real public banking model, a community banking model, here.

Mario Draghi was not wrong in 2018 when he said that the Irish banking system operates as a quasi-monopoly. In fact, those words are truer now than they were in 2018, with the retrenchment that has happened since then, with banks like KBC and Ulster Bank having left the market. The State, of course, retains a significant shareholding in AIB, meaning it continues to be an active participant in the banking sector. We are concerned that the Government's plans to return the bank to full private ownership also see a further remodelling of its business to compete with digital-only banking providers like Revolut, which have a different cost base. We could then see a further socially disruptive gutting of more branches across bank networks. The view that the State can outsource the filling of the resulting gaps in physical services to our much valued and dynamic credit unions and An Post is misguided. An Post is being asked to provide more services and, in itself, this is a good thing. The credit union movement is also being asked to provide more services and this, in itself, is also a good thing. They can, of course, be doing more but they cannot provide all the services we are used to getting from the established banks.

Regarding the technicalities and what this Bill seeks to achieve, as I said, the premise is sound. It is welcome that IADs and CIT companies will be brought under the regulatory framework of the Central Bank and that certain obligations will be placed on them to ensure reasonable access to cash. Given the number of ATMs that have been sold off by the big banks to IADs, it is important that they fall under these frameworks to offer greater consumer protection and the continued guaranteed provision of services. The IAD business model relies on service charges for the use of ATMs. Given that they own 60% of our ATM network, it is important that there is some level of control over those charges to prevent consumers from being ripped off. Many people already find the existing charges excessive. The provision in the Bill empowering the Minister to limit fees will be welcomed and I encourage him to exercise that power. These fees can and do place a barrier on some people actually being able to access their cash.

If I am correct as well regarding the original debate on this Bill, and I must reflect on the legislation again, concerns were expressed about the availability of certain denominations when people go to an ATM. We have all experienced this problem. The reality is that on many occasions, the smallest denomination it is possible to obtain from an ATM is €50. That might not be what people need. It might be the day before payday in many cases and people might need €20 or even €10 to allow them to obtain the messages and groceries they might need and so on. This is something that must also be reflected in the legislation. I need to reflect on exactly what the provisions of the Bill state in this regard, but it is important that we include a reference to this matter in it.

Similarly, given the central role of CIT companies in the circulation of cash in our system, bringing them under the regulatory framework of the Central Bank is a welcome move. There are substantial risk management, governance and business continuity considerations here, so it is important that the Central Bank has oversight. I am also glad to see that this Bill gives the Minister the power to specify the percentage of our population that must be within a given distance of an ATM and I anticipate some lively debate on Committee Stage regarding this topic. Other countries have put this measure in place and I think it is the right move to ensure the protection of our ATM network and to maintain reasonable access to cash. I question why the Minister has not yet specified that percentage. As I said, I have no doubt we will debate this point on Committee Stage. It was set at prevailing levels in December 2022, from the best of my recollection, which I believe put approximately 99% of the population within 10 km of an ATM and put a regional framework in place. That seems fair enough, but I would have liked to have seen a stronger statement of the calculations for each region in the Bill and how the percentage would be arrived at. Perhaps the Minister, with the support of officials, could clarify this aspect.

The point Deputy Doherty made earlier is a universal one that I think everybody will agree with. Having a physical ATM in a specific location is all well and good, but the issue lies with access to it. With the reduction of banking services, we all know that ATMs are being removed from those former banking facilities, especially in certain rural areas, and the only ATM that may be available could be in a shop that might close at 10 p.m. The commitments around this issue need some work.

Notwithstanding all those comments, I reiterate our support for the Bill. It will be very important legislation for those who may feel a bit left behind in the digital era and those for whom cash is easier to manage and budget with. More generally, it is important that people simply have a choice in how they want to do their banking and make transactions. This Bill will, I hope, ensure the continued protection of this choice.

See this speech in context