Wednesday, 12 January 2011
Department of Finance
Question 79: To ask the Minister for Finance his views on the recent increases in bank fees for basic current account services at Bank of Ireland, a bank in receipt of significant State support; if his attention has been drawn to the fact that, by their nature, this new charging regime will impact most severely on those least able to pay; the steps that have been taken to date to introduce basic bank accounts as foreseen in the original bank recapitalisation agreement of 21 December 2008; and if he will make a statement on the matter. [1374/11]
I am disappointed that the bank is increasing charges for its current account customers but can understand why they are doing so. The Government operates an arm's length relationship with the banks in which the State has a shareholding and the commercial decisions on how best to operate the bank remain a matter for management and the board. I have no role in approving or setting bank charges. This responsibility lies with the Central Bank. Under the Consumer Credit Act 1995, banks must make a submission to the Central Bank if they wish to introduce or increase charges in respect of a service.
Where a bank has exempted customers who meet certain criteria from charges, and subsequently change the criteria, there is no requirement for any subsequent notification to, or approval by, the Central Bank provided the charges are within the permitted limits. I would also advise the Deputy that the National Consumer Agency's website www.itsyourmoney.ie provides a cost comparison table on the main current accounts provided by individual firms which includes details of how to qualify for free account maintenance and transactions.
Any proposed changes to charges or qualifying criteria must be notified to customers in advance. In the case of current accounts, the minimum notice period is two months and must be in accordance with the terms and conditions of the account.
Regarding the issue of basic bank accounts, as part of the restructuring plan process currently underway with the European Commission, it has been proposed that the domestic banking sector will be required to support and promote the availability of a basic bank account. This is to be done in the context of the implementation of the Government's strategy on financial inclusion in the State.
Work is underway on a review of the options available to achieve greater financial inclusion – including the introduction of basic bank accounts by end-2011. The objective of the review, which is being undertaken by the Social Finance Foundation on my behalf, is to identify recommended actions to achieve a substantial reduction in financial exclusion over a 3-5 year period.
The preparation of the review is overseen by a Steering Group comprised of key stakeholders and chaired by my Department. I expect to receive a draft report setting out the recommendations from the review sometime in the first quarter of this year. I intend to publish this review for consultation purposes.