Malcolm Byrne (Fianna Fail) | Oireachtas source

I thank the Minister of State for coming in to take this matter. It is one that is of personal interest to him. As far as the consumer is concerned, there is very limited, and in some sectors no real competition, in banking, insurance and financial services in Ireland. The Minister of State will also be aware that there has been criticism among fintech companies about the approach the Central Bank has been taking, especially about trying to encourage a number of these companies to develop here. Due to his own expertise, he knows that we do not have competition within the insurance sector and in many sectors there is only one provider offering insurance products. In some areas there is no Irish provider and people must go outside the State to try to find service.

Every time we hear of a bank leaving the Irish market, meaning there is less competition, we sadly hear somebody from the Central Bank saying promoting competition is not its function. The Minister of State will be aware that there are some roles for the Competition and Consumer Protection Commission, CCPC, that he may be able to clarify. He will be familiar with the Herfindahl-Hirschman Index, HHI, which looks at the whole area of market concentration. If the HHI is greater than 1,000 it is regarded as a very concentrated market and if it is greater than 2,000 it is a highly concentrated market. The Irish mortgage market currently has a HHI of over 2,100 and for new lending Ireland has a score of 2,624. We thus have a highly concentrated market with no competition.

While the euro has lead to greater market integration it has not led to more competition. It certainly has in the areas of wholesale banking and corporate finance but in retail banking and with respect to benefit to the consumer we have not seen real competition. The Central Bank has acknowledged this. Governor Gabriel Makhlouf, writing on thecurrency.newsin January 2021 made clear the Central Bank did not have a function in the area of competition. In the bank’s own strategic policy statement, its strategic plan published in September, the word “competition” is not mentioned once. This is in contrast to central banks worldwide that in many cases have a specific mandate to promote competition. There is a statutory mandate to do so among the central banks in Australia, Argentina, China, India, Poland, Saudi Arabia, South Africa and the United Kingdom. While it is not formally set out in legislation, competition is a function of the central bank, and is clearly promoted, in Brazil, Russia, Singapore and Thailand but also crucially in our fellow eurozone countries such as France and Germany. The Lithuanian Central Bank’s strategic plan lays out very clearly as one of its core competences – and the country is a competitor for us in financial services – that it wants to encourage competition in the financial sector and boost competition in the payments market. Therefore, if we end up losing more banks or insurance companies, I do not want to hear the Central Bank washing its hands and saying it does not have a function with regard to competition.

I appreciate there is a memo between the CCPC and the Central Bank around who has responsibility in these areas but I ask the Minister of State to guide me on this because we do not seem to have any agency specifically looking out for the consumer, be they an individual or a business, to ensure we have a competitive market. In the era of digital currencies and especially when we move towards a central bank-issued digital currency, namely, the digital euro, it is going to be even more important that there is a very clear competitive mandate given to the Central Bank.