Shane Ross (Independent)

I would like to discuss some of Senator Leyden's points. It would be wrong to state, as Senator Leyden did "in fairness to AIB", that it came out with its hands up, admitted everything and behaved well. That is not the case because AIB behaved disgracefully. It misled the public even though it had been caught red-handed. It put the figure of €14 million into the public arena, but it was forced within days to raise the figure to €25 million. AIB tried to distance its senior staff from this fraud by trying to blame junior staff, but it was forced within days to admit that the behaviour was not exclusively confined to junior staff. I would not particularly trust a so-called "independent" AIB inquiry, given that it has behaved in such a manner. The bank gave an incorrect date. It stated the problems had been ongoing for eight years, but they had been continuing for ten years. It misled the public in that regard. AIB also said it was sorry that the customers affected are untraceable, but it was forced to admit within a week that at least 80% of the rip-offs, as they have rightly been called, are traceable. In its response to this accusation, AIB misled the public on at least four counts. It displayed a certain arrogance by handling the matter in such an absurd manner. It took a week for the Chairman of AIB to move in to issue a statement, which was so close to countermanding and contradicting the first statement that it must have been a matter of acute embarrassment to the bank.

It is difficult to tackle this big issue in isolation. I am glad the Minister broadened it somewhat, because it should not be considered in isolation from what happened in the last two weeks. The events of recent weeks are no more than a symptom of what is wrong with Irish and foreign banks. Nobody could consider Irish banks to be symbols of private enterprise, risk-takers, those who assist industry and those who make a great contribution to the country's GDP. It is a long time since Members of the Oireachtas, particularly those on the left wing, argued that banks should be fully owned by the Government, or that they should be nationalised. I do not believe they should be nationalised, but we should ask questions. Who are the banks? For whose benefit are they run? I contend that they should be run for the benefit of the small shareholders who own them, in essence. It is obvious that some small shareholders are owned, in turn, by large shareholders, who use their blocs to support each other.

The banks should be run for the benefit of small shareholders and consumers, but they are not run in such a manner. There is plenty of evidence to suggest the banks have become some sort of runaway monsters that are run more for the benefit of bankers than for the benefit of shareholders or customers. I wish to cite comments made by the chief executive of Bank of Ireland in an interview last week. I have already pointed this out in another place, so I apologise if anybody is aware of it. The chief executive gave a staggering reply when he was asked about recent events in AIB. He said defensively that we have a wonderful banking system. He chose an extraordinary week in which to make such a remark. It is evident, from his replies to that and other questions during the week, that the chief executive of Bank of Ireland is incapable of saying anything bad about AIB. It is quite extraordinary.

It is likely, in any other commercial rivalry, that a chief executive would take some advantage of the discomfort of another to try to pinch customers. When the chief executive of Bank of Ireland was asked last week about AIB's problems, he said that we have a wonderful banking system. What can we derive from the fact that during another interview he described AIB as a very competitive bank? Can one imagine Michael O'Leary adopting a similar approach in respect of Aer Lingus? If Aer Lingus was caught charging too much, would he say "hold it there boys, this is a great airline, they are a very competitive lot"? It just would not happen. What does it tell one about the difference between the banks and really strong companies with an enterprise ethos? It tells one that the banks automatically protect each other as a knee-jerk reaction. They will not put the boot into each other and will never say a bad word about each other. That was notable last week. While I am open to contradiction about this because I do not read everything that is written about banks, I did not see a single banker put the boot into AIB. I did not hear anyone from the Ulster Bank, National Irish Bank, the Bank of Ireland, Anglo-Irish Bank or anybody else saying "Come to us, we won't overcharge you". Would it not be natural for them to say "We'll charge you less and we haven't been charging you these appalling amounts for so long"? They did not say that, however. They were either silent or said things are okay and we have a great banking system. They are dead right — it is a great banking system for them, but not for the customers or shareholders.

Approximately three weeks ago, at the annual general meeting of AIB, all eight or nine resolutions were passed by 97% to 3%. That tells me that the Bank of Ireland, Irish Life and all the other large banking shareholders were voting for each other. Of course, if one of them voted against any resolution at an AGM, the others would do likewise and who knows what would happen then. We might have a competitive banking system, God forbid. It would ruin their party. It is very unlikely to happen in this country, however, given the way in which we are allowing these sort of things to go on.

It is indicative of the Government's attitude that, having discovered an abuse of the sort practised by AIB, we suddenly find that damn all can be done about it. That is because under the provisions of the Consumer Credit Act, there are no penalties for this particular offence. The banks can rip off €25 million but cannot be penalised. How did that happen? It is an extraordinary indictment of governmental deference to the banks that they can commit an offence by taking at least €25 million, although I am sure it is a lot more than that, including other spheres as well, and nothing can happen.

We now have a new regulator who has forced them morally at least to put €25 million in escrow in the Central Bank. That is an improvement but the banks continue on their merry way and we see more revelations each week, not only about the first issue but also about travellers' cheques and other areas where they overcharged without being detected. I contend that this is a far deeper problem than AIB.

I now turn specifically to the AIB affair itself. Some of the drafting in the Minister's speech is somewhat depressing and dilutes the offence. In establishment channels — maybe in the Department of Finance or higher up — there is an instinct to dilute the offence and protect the banks. In his speech, the Minister referred to this offence under the Consumer Credit Act 1995, stating: "This Act required credit institutions to notify the director of their charges. However, it did not make a failure to notify correct amounts to the director an offence." However, the Minister is not talking about a failure to notify correct amounts to the director, but about a fraud. He is talking about a bank charging an illegal amount and probably doing it knowingly, yet the way the Minister's speech was phrased indicates to me that it is only a soft Government interpretation of what is going on and that there is still an inclination to let the financial institutions off and give them the benefit of the doubt on this occasion.

In his speech, the Minister also stated: "As regards ongoing official policing of the 1905 Act provisions, I understand there is a spot-checking system in place and the majority of these spot checks have concentrated on foreign currency cash transactions." Why did these spot checks never come up with a result? If such spot checks were going on, why was the overcharging not detected by IFSRA? At least €25 million was involved, which means that hundreds of millions were changing hands in this offensive way, involving abuse, by being channelled through foreign exchange transactions in this category. It seems to me that the spot checks were inadequate. The banks were aware that IFSRA was a toothless tiger because the spot checks being carried out by the regulator were not working. While the Minister said that IFSRA has done all sorts of good things by taking initiatives and producing immense amounts of documentation and information for consumers, it does not appear to have detected the worst offences that were going on at that time.

As the Minister said, IFSRA's work is vital when it comes to explaining complicated financial products which people do not understand, but it is not good enough to use the caveat emptor approach. We must find a method of ensuring that consumers who purchase complicated products, such as tracker bonds, are aware of what they are buying.