Dáil debates

Thursday, 1 April 2021

Saincheisteanna Tráthúla - Topical Issue Debate

Banking Sector

6:00 pm

Neasa Hourigan (Dublin Central, Green Party)
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I thank Deputy Verona Murphy for raising the issue of orthodontics because it comes across my desk all the time. Access to training for orthodontists is an issue we must address as well.

I will talk about a banking forum. A few weeks ago, the Dáil debated the current banking situation in Ireland. I think we would all agree that we are at a moment of great difficulty. We had the announcement by Ulster Bank that it is withdrawing from the Irish market. Hot on the heels of that came Bank of Ireland's announcement of the closure of almost 100 of its branches. During the debate, Deputies from every party and Independent group spoke of the high level of distress in communities and their worries about losing local bank branches and access to banking services. This is a matter of financial inclusion. Financial inclusion and access to bank services are closely linked to the ability to access money and use it well.

We heard that there is a real concern about competitiveness in the banking sector and that having two pillar banks operating here is not competitive. We have a banking duopoly. We heard that financial products may become more profit driven. We already have one of the most expensive mortgage products in Europe. Most important, the Minister for Finance, in response to questions from me and other Deputies on whether there is any expectation of another pillar bank entering the Irish market, stated the answer was "No". It is not that the banks leaving the market were not making a profit. They were just not making enough profit. In those circumstances, it is very hard to see how another bank would enter the Irish market.

The issues facing people in the context of banking speak very much to some of the discussions we have had today on regional access and development. There was a very good announcement from the Government this week about rural funding and the ability to work remotely, and concentrating on and trying to support local and regional communities and areas in Ireland. If SMEs do not have access to credit, much of our good work will be undone. We know from the research that having a local bank branch and a relationship with the manager of it has an impact greater than 50% on whether an SME is comfortable accessing credit. We know in Ireland that SMEs do not access enough credit.

We are now facing into the ramifications of Brexit and Covid and the post-Covid recovery. The Financial Services Union, FSU, has called for a banking forum so that we can get all of this stuff on the table and look at it in detail, and have all of the players in the banking sector in a room together to discuss it. As we face into the post-Covid recovery, people's ability to access credit will be of paramount importance. If a local bank branch is closing and one is not able to walk down the road to another branch and talk to a manager, that will impact on people's immediate experience of financial inclusion and also on our national recovery from the pandemic.

I ask the Minister of State to indicate whether the Department will set up a banking forum. By a banking forum, I do not just mean the Minister for Finance or the officials from the Department of Public Expenditure and Reform sitting in a room with pillar banks and, perhaps, the Central Bank. We want credit unions, post offices and labour unions at the table and a truly inclusive discussion on what should be the future of banking.

6:10 pm

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Deputy for raising this issue. As she is aware, the FSU has suggested the establishment of a banking forum involving all relevant stakeholders coming together to discuss the future of banking in Ireland.

When the Minister for Finance met the FSU last December, he highlighted that he did not think that our Department should participate in such a forum. His concern in this regard was that the participation of a competent authority in the formulation of proposals and recommendations which would then be submitted to Government for objective consideration by the same authorities did not present a model of good governance. However, he assured the FSU that he and officials in his Department would examine any proposals or outputs from the FSU or a banking forum organised by it, should it be established. His position has not changed since that meeting.

Earlier this month, the FSU published a discussion paper on the future of banking in Ireland. It set out a number of principles for the forum, including that it would be organised under the auspices of the Government and would meet approximately four times a year, which implies a permanent or semi-permanent structure. The FSU believes that this forum should include all stakeholders, including the banks, customers, staff, management, trade unions, business and employers' groups and community interests. The paper also sets out a wide range of topics the forum could discuss, including, among others, the lack of public trust in banks, the issue of artificial intelligence in banking, the closure or downgrading of branches and ATMs, financial exclusion, illiteracy and digital exclusion and banking culture, ethics and whistleblower protection. Trying to address such a broad range of difficult topics in the suggested structure may prove challenging and, in an ever-changing environment, will need a rapid response.

The programme for Government highlights the importance of social dialogue and open engagement with all sectors of society. Accordingly, the Minister and our Department are happy to engage with all stakeholders in an appropriate manner. In that context, the Minister engaged with the FSU last year on the strategic review of Ulster Bank. In addition, he met the FSU on the day NatWest announced the outcome of that review. He also gave a commitment to further engagement with the FSU regarding Ulster Bank.

Last Tuesday, I met the FSU to discuss a number of matters relating to the banking forum. Officials from the Department will meet the FSU to discuss its discussion paper in the coming weeks.

The Central Bank and the Department regularly hold public consultation on policy matters. The Department has conducted several public consultations on financial services in the past 18 months, including on corporate bonds and the risk reduction measures package. These consultations are open to all sectors and allow all interested parties to make a submission.

I recognise that the FSU is trying to represent most of the 23,000 staff in the main banks in the Republic of Ireland. We are all very concerned and want to assist in every way to make sure there is a viable banking service available to the public in the future.

The Central Bank is also finalising plans for a public consultation on a substantial update of the consumer protection code. The update will address the emerging trends and risks in financial services to ensure the code continue to deliver strong protections for consumers in the future. Proposals on how to strengthen the consumer protection code and access to banking can be dealt with in that context. The Central Bank expects that the public consultation will commence during the course of this year.

Neasa Hourigan (Dublin Central, Green Party)
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I thank the Minister of State for his reply. Not to be coy about this but I see a banking forum as a first step to talking about public banking, something for which Green Party has pushed for a long time. It would speak to issues around regional access to banking. It is something to which 21 countries in Europe have access, but we do not. We do not have that level of competition or choice in the banking sector for people in Ireland.

The idea that a banking forum is somehow unacceptable and that the Minister would not want to be involved in a forum that speaks to his Department is somewhat problematic considering that we are talking about a fully regulated industry. Not to criticise the public consultation framework, because the Green Party is very pro-public consultation, but public consultation often involves the Department having made a series of decisions, publishing a report or creating a development programme or a plan, and then putting it out to the public to ask what it thinks about the decisions it is making. That is not what a forum would be. It would involve bringing everybody into a room, identifying the issues and working together to find a solution. That is more formative in the decision-making process than a public consultation. In terms of the crisis the banking sector is facing, the Department's usual approach will not do the job. This is more primary than that. We are in a more difficult situation. This is not about public consultation; it is about community decision-making. We need to look at it on that level.

I accept that the Minister of State is bringing the decision here from the Minister. In 2019, the Indecon report on public banking was published. It stated we did not need public banking or a more considered discussion in respect of it because there was no failure in the industry. In 2021, there is a failure in the industry and we need to talk about it.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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Again, I thank the Deputy for raising those points, particularly in the context of her party's position on this matter. I understand from the Department of the Environment, Climate and Communications that An Post is transforming its retail network by delivering new products in all formats, including loans, credit cards, more foreign exchange products, insurance products, local banking, in association with the major banks, and a full range of State service products. If the Deputy requires any further information on this, that can easily be obtained.

Post offices have a good arrangement with AIB and are now moving onto a strong arrangement with Bank of Ireland. I am convinced that the credit union movement has a strong presence in all of the towns where branch closures have recently been announced. In terms of a banking service available to the public, the post office network is stepping up to the plate in a big way. My Department is aware of that.

Credit unions have a key role to play in banking. I encourage them to provide greater banking service in communities. There is not a single location where a branch has been withdrawn by Bank of Ireland that there is not a post office, a credit union or both within a couple of hundred metres.

I understand the banks have agreed to the forum. The Irish Banking Culture Board has also agreed to it. I am sure the Banking Federation of Ireland will agree to the terms, as will the FSU. I am sure quite a number of public bodies will be interested in participating.

The forum can happen but it should not be driven, monitored and administered by the Department of Finance. I would love to see it happen and its conclusions but if the Department is involved in its administration, management and setting up the process, it would represent a conflict. The Department should be able to consider the forum's findings rather than being a key participant.