Leo Varadkar (Dublin West, Fine Gael)
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Question 163: To ask the Tánaiste and Minister for Finance the recommendations of the Competition Authority regarding banking that he has introduced to date; and if he will make a statement on the matter. [4682/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I welcomed the publication on 22 September 2005 of the Competition Authority's final report on competition in the non-investment banking sector. The 25 recommendations contained in the Competition Authority's report were directed largely at the industry, its representative bodies, the Financial Regulator and Central Bank, as well as to the Minister for Finance. Points addressed for the attention of the Minister for Finance included the issues of stamp duty, the regulation of banking charges and the question of improvements in the area of cheques and mortgages.

Measures had already been taken, through the Finance Act 2005, to eliminate a double stamp duty charge on switching of financial cards. I have reduced the stamp duty charge on financial cards in Budget 2008. The Authority recommended that regulation of non-interest bank charges under Section 149 of the Consumer Credit Act should only end once its other recommendations to facilitate and improve market entry and switching have been successfully implemented and are working in practice to improve competition. The Financial Regulator, in the context of its statutory consumer protection role, has advised my Department that further assessment is necessary to ensure that the interests of consumers are safeguarded, in advance of any decision to deregulate non-interest bank charges.

The Authority also suggested that the Irish Payment Services Organisation should investigate if new technology, allowing banks to exchange electronic images of cheques (known as cheque truncation), would yield efficiency benefits. I understand that this assessment has been undertaken, and I am open to consider proposals for changes to legislation to facilitate improved cheque handling technology, if a clear and compelling case is made. However, the competitiveness needs of the Irish economy point to a decisive shift to efficient electronic payment systems rather than measures to maintain less efficient paper based payments.

The Competition Authority report acknowledged that any measures aimed at improving competition need to take account of relevant EU developments. This has particular relevance to recommendations relating to the establishment of an Automated Clearing House (ACH) as events at European level have changed the context considerably. Ireland is participating in the Single Euro Payment Area initiative, which aims to deliver a common payments environment for the eurozone. My Department is currently engaged in work aimed at the transposition of the Payments Services Directive, which provides a harmonised legal framework to underpin SEPA. SEPA should enhance competition in the payment services market not merely in Ireland, but across the EU/EEA.

A further recommendation made by the Competition Authority related to mortgage switching. The Deputy may wish to note that subsequent to the publication of the Competition Authority report, a number of providers have entered the Irish mortgage market offering competitive products for customers wishing to switch their mortgage. Finally, I understand the Irish Bankers' Federation are working on a standard mortgage deed in relation to residential mortgage lending. Once this has been completed, my Department will work to identify any changes to legislation that may be necessary.