Dara Calleary (Mayo, Fianna Fail)
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6. To ask the Minister for Finance his views on recent increases in bank charges and the consequent impact on personal and business customers; and if he will make a statement on the matter. [4675/15]

Dara Calleary (Mayo, Fianna Fail)
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I would like to discuss with the Minister the impact of recent increases in bank fees for SMEs. In some cases maintenance fees have been increased by 300%. The banks say it is a direct consequence of the Government's wish to expand online banking. This is having a significant impact on SMEs along with the general lack of choice in business banking in the market.

Michael Noonan (Limerick City, Fine Gael)
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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149 would give unfettered price setting power to the incumbent and, therefore, it was recommended that it not be repealed.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.

Dara Calleary (Mayo, Fianna Fail)
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Even since the report's publication, Bank of Ireland has increased the quarterly maintenance fee for business customers from €5.25 to €15. Cheque lodgement charges have increased from 20 cent to 60 cent, while a book of 50 cheques now costs €15, as opposed to €4. Equally, AIB increased its fee for an e-banking product by 25% overnight after directing approximately 46,000 businesses into it. These charges have a direct impact on the bottom line of small and medium enterprises that are struggling. Many banks now dictate the days on which coins can be lodged, for example; therefore, if a person works in a service industry, there are days when he or she may be forced to keep cash on the premises because the banks will only take coins on specific days and sometimes only two or three days a week. That happens in a town not far from where the Minister lives and in which there is a big dependence on the service industry. One arm of the Central Bank does not know what the other is doing. Its representatives have lectured us about costs in the economy moving out of the stream, but, on the other hand, they seem content to stand by and allow this level of increase. I note the Minister's comment on the charges being listed on the website, but he knows that businesses find it difficult to shop around for banking facilities because of security concerns and the problems which come in moving from one bank to another. They do not tend to do it and it seems the banks are exploiting this inability to move.

Michael Noonan (Limerick City, Fine Gael)
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There is no connection between the report published by the Department of Finance in 2013 and the subsequent increases in charges by the banks. The Central Bank has a role in authorising charges and may alter them, but the Minister for Finance has no such role. I presume the banks were waiting to see if section 149 of the Consumer Credit Act 1995 would be repealed or if there would be a proposal to do so. We indicated that there would be no repeal, as if that were to happen, there would be carte blanchefor the banks to do as they wished independent of the Central Bank. There is still control.

It is true that, on a comparative basis, the range of fees in Ireland is much lower than in comparable institutions across the European Union. If we are to attract competition, a range of fees more closely allied to what is happening in Europe would be appropriate. It is up to institutions and the Central Bank to decide on fees. There is some evidence that new institutions are coming to Ireland, of which the Minister of State, Deputy Simon Harris, who is in charge of financial services would have significant knowledge.

Dara Calleary (Mayo, Fianna Fail)
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I did not want to make a connection between the report and the increases, but the reality is that the increases have happened. The Minister has a role because he is the main shareholder in one of the banks and a minority shareholder in the other. He is the Minister whose Department regularly publishes targets for small and medium enterprise, SME, lending and the condition of that sector's finances. I quoted the charges of Bank of Ireland, which has indicated that they are being introduced in line with the Government's national payments plan. I do not accept this and it is a cop-out by Bank of Ireland. As somebody who is in charge of SME lending and pushing the banks into such lending, the Minister has a role. This is particularly relevant, as we are about to establish the strategic banking corporation which could have been another player in the market if it had been approached differently as an independent bank in its own right. We are going to give these guys more money to lend to the same businesses on which they are piling pressure.

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, when my predecessor, the late Brian Lenihan, brought the banks into public ownership, there were arrangements, agreements and legal contracts signed to the effect that the Department of Finance and the Minister would not interfere in the commercial affairs of the banks. He was absolutely right to do so and I have followed these rules. We do not interfere in what are considered to be the commercial considerations of banks. The new strategic investment bank will operate and develop products independently. Retail banks will be used as gateways to deliver money to businesses, but the bank will be independent in the exercise of its functions. There will be announcements in that regard very shortly and Deputies will be happy with the details.