Joan Burton (Dublin West, Labour)
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Question 239: To ask the Minister for Finance if his attention has been drawn to the difficulties and charges faced by businesses paying suppliers and contractors based outside the single euro payments area, particularly the UK, by bank transfer; if his further attention has been drawn to the fact that such charges impose a financial burden on businesses, particularly small businesses and that such charges are often flat rate charges, resulting in small transactions to be relatively costly; if he has proposals to help alleviate this problem; if he has taken the opportunity to raise this matter at EU level or directly with her counterparts in the UK; and if he will make a statement on the matter. [34025/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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This is not an issue that has been raised by the relevant stakeholders to my Department. I assume the Deputy is referring to payments made in sterling when referring to transactions being made to suppliers and contractors based in the United Kingdom, which is outside of the eurozone.

Transaction charges for retail cross border credit transfers in euro within the EU must be charged at the same rate as the equivalent domestic transaction. This obligation flows from the Cross-Border Payments Regulation (Regulation 2560/2001(EC)) adopted by the EU on 19 December 2001 which established the principle that charges levied by an institution in respect of certain cross-border payments in euro will be the same as the charges levied by the same institution for corresponding domestic payments. Non-eurozone Member States were entitled to opt in to the provisions of the Regulation. However, I understand that the United Kingdom has chosen not to do so. Therefore payments made in sterling to or from the United Kingdom are not subject to the Regulation. Non-eurozone Member States may opt to implement the Regulation fully at any stage; however this is a matter for the relevant Member States.

With regard to the regulation of bank charges in the State, there are basically two categories of charges applied by the banks — interest-related banking charges and non-interest-related banking charges and fees.

Interest-related charges are determined by the banks themselves on the basis of market considerations and neither the Minister for Finance nor the Financial Regulator have any statutory role in this matter. In setting the level of such charge for a borrower, a bank would have regard to a variety of factors such as the prevailing rate set by the European Central Bank, the customer's credit history, the risk perceived to attach to the loan and the cost of funds to the bank.

The regulation of non-interest-related charges, such as cross border banking charges, is vested in the Financial Regulator under the Consumer Credit Act 1995 and credit institutions are obliged to seek the prior approval of the Regulator before any increase in such charges above the previously approved level. In fact, Ireland is the only EU country with statutory control on such fee increases.

The Financial Regulator assesses each charging proposal against the criteria set down in the Act and either approves the charge at the notified level, approves it at a lower level or rejects the proposal. The criteria set out in the Act are: · the promotion of fair competition; · statement of commercial justification; · a credit institution passing any costs on to its customers; and · the effect on customers of any proposal to impose or change any charge in relation to the provision of such service.

By way of concluding, it is a matter for individual businesses to actively 'shop around' to secure the best value for money in the costs associated with cross border banking charges.