Catherine Ardagh (Fianna Fail) | Oireachtas source

I thank the Minister for coming to the Chamber to address us on the future of banking in Ireland. We all know there has been a flurry of activity in the Irish banking market and in the world banking market in regard to the development of cryptocurrency. As legislators, we have to ensure that we put consumers first and that we have the consumer's back, not the bank's back. It is our job to do all we can to make sure consumers get the best possible deal.

Like other speakers, I want to speak about the two high-level banks that are leaving the Irish market, KBC Bank Ireland and Ulster Bank. As we all know, both banks have, or will, sign memorandums of agreement. Those deals are subject to approval by the competition regulator, but it is important that we, as legislators, and the Minister for Finance ensure that the Central Bank keeps an eye on these transactions and that the banks put the consumer to the fore.

In his opening statement the Minister said that in the European context, there is a view that the banking sector has too many participants and there is a need for them to consolidate. That is not the case in Ireland. As we know, there are too few banks in Ireland. The rating agency Fitch predicted that both lenders could strengthen their pricing power and leading positions in certain domestic lending institutions on the back of these deals. It is worrying that there will be an abuse of a dominant position in a market. The financial regulator and the Competition and Consumer Protection Commission need to be acutely aware of this.

As stated by many of my colleagues, we do not have the luxury of being able to attract European banks to Ireland. In terms of interest rates across Europe, Ireland is the second highest at 2.7%, the average being 1.2%. In Finland, interest rates are as low as 0.7%. What are we doing wrong? Is it the case that household arrears and the court processes around that are keeping interest rates here high? I do not think that is correct. I would welcome the Minister's thought on the matter. People deserve due process and the organisations supporting consumers who are in arrears deserve to be appropriately funded in order that cases can be heard in a timely and efficient manner. We are hearing a great deal about backlogs. Again, is this the only reason other banks are not coming to Ireland? I do not buy that.

There are other banks in the Irish market. For example, Avant, in the case of a loan to value of 60% one can get a 1.9% interest rate. Dilosk is also servicing mortgages, but for the buy-to-let sector. These mortgages are financing those who are wealthy and have a lot of equity in their homes. We need a State banking service that all people can access, and which lends, not at high levels, but at moderate European-average interest levels.

My second point is in regard to the two pillar banks, AIB and Bank of Ireland, and negative interest rates. We know that negative interest rates have been applied by the European Central Bank and that these are being passed on to Irish consumers. Both AIB and Bank of Ireland previously applied negative interest rates on current accounts over €3 million but that is changing. AIB and Bank of Ireland are now moving to apply negative interest rates on accounts over €1 million. This will affect many small and medium-sized businesses around the country who, while they have money in their current accounts, have been hit massively by Covid and will need some insulation as, as always, we do not know what is around the corner. It is wrong that the banks are applying these charges on small companies. Solicitors' accounts, in which money is being held for clients, will also be affected in terms of the application of these negative interest rates on client accounts over €1 million. The sum of €1 million sounds like a lot of money, but for a small solicitor's practice all of these charges add up.

The third issue I want to raise is mortgage switching, which is something we can do in the short term. We should encourage consumers to switch mortgage lenders, in particular those who have had mortgages for a lengthy period because they will have a lot of equity in their homes. They can switch to other providers like Avant and Dilosk and get a better rate.I do not think people know that this opportunity is available to them. It might be up to the Central Bank to let people know that mortgage switching is available and will reduce their monthly costs. A significant factor that holds us back from switching mortgages is the fact that it is so difficult, there is so much paperwork involved and there is no legislation in place to do e-conveyancing. The Minister needs to look at that in conjunction with the Minister for Justice to ensure that e-conveyancing is put to the fore. E-conveyancing is about ensuring consumers do not face massive legal fees and that the process of remortgaging is easy and swift and that it is not slowed down.

I have covered the issue of the state bank. What is the Minister's view on the repossession question? Does he believe European banks are not coming to Ireland because of the repossession issue and the difficulty in repossessing homes? Is that the problem? I know we all think it is but I would love to hear the Minister's detailed view on that?