Enda Kenny (Mayo, Fine Gael)
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Question 45: To ask the Minister for Finance his views on the Report on Competition in Banking recently published by the Competition Authority. [7102/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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In responding to the Deputy, I should, perhaps, first clarify the context in which the recent report was published and the views of interested parties sought thereon.

The report published by the Competition Authority last December was one which had been prepared for it by a firm of consultants. While endorsing the analysis in the report, the authority has not yet taken a position on the findings in the report. It is only after it has considered the responses to the current consultation exercise that the authority will issue its own report and recommendations, probably around mid-2005. Given these circumstances, the response which I sent to the authority was a preliminary one. This will be reviewed in the light of the finalisation of the authority's own position in relation to the issues raised in the report.

The report which was published contained 40 recommendations, but only a small number of these were actually addressed to my Department. A particular focus of interest for my Department related to stamp duty on "plastic" cards. The recommendations on this topic dealt with the issue of the double stamp duty burden on persons in a year in which they switched card providers, or up-graded or down-graded the status of the card provided by their existing supplier.

I had already indicated in my budget speech last December that I would take steps to eliminate this double charge and section 120 of the Finance Bill 2005 provides accordingly. It amends Part 9 of the Stamp Duties Consolidation Act 1999 to provide for an exemption from a second or subsequent charge to stamp duty for financial cards such as credit cards, charge cards, ATM cards, Laser cards and combined cards arising from the switching of accounts within a financial institution, or from one financial institution to another, in the same year of charge. The change in relation to credit cards and charge cards will take effect from 2 April 2005, while the change in relation to ATM cards, Laser cards and combined cards will take effect from 1 January 2006.

A second area of particular interest to my Department in the report concerned the recommendation that the regulation of non-interest bank charges be phased out. As pointed out in the response which I forwarded to the authority, the regulation of non-interest charges and fees is aimed at consumer protection. It facilitates IFSRA both to verify that notified charges are in fact being applied to customer transactions and to require restitution in the event of overcharging. A reconsideration of the present arrangements would be warranted only in the context of a compelling case being made that these provisions significantly deter new entrants to the markets for these banking products, or that the effectiveness of competition in the sector is considerably increased.

There were some other issues in the report for my Department, to which I have also responded. I am arranging to have the full text of the response placed on my Department's website.

As to my own views in the matter, I welcomed the report when it was published. The approach of putting the consultants' views forward for discussion is an interesting one. As I said, when the authority takes its own position on the various issues I will consider the matter further.