Written answers

Tuesday, 19 July 2011

Department of Finance

Banking Sector Regulation

10:00 pm

Photo of Ciara ConwayCiara Conway (Waterford, Labour)
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Question 104: To ask the Minister for Finance his views on the cessation of overdraft facilities in a particular case (details supplied); if there is any mechanism, such as an appeal or review mechanism, available to the organisation to deal with this matter; the implications for the community and voluntary sector and those employed by the same; and if he will make a statement on the matter. [20990/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The decision on whether or not to grant credit facilities, including overdraft facilities, is a commercial decision for individual lending institutions. Each lending institution assesses properly and independently the individual risks that it is considering accepting. At the same time, borrowers should avoid building up substantial additional arrears due to interest accruing for long periods on overdrafts.

I have no powers to request a bank to provide overdraft facilities to a given customer. I understand from the Central Bank that firms use overdraft facilities to cover short term cash flow issues such as the payment of wages and salaries. The issue is whether using overdraft facilities for such purposes is viable in the long term. Continued use of overdraft facilities may run the risk of incurring high interest charges which may ultimately call into question the viability of the enterprise. It is a matter for the operator of the enterprise to ensure that there are proper management and good governance arrangements in place to provide that the best interests of the community are served.

However there are mechanisms available to customers who are dissatisfied with the treatment they receive from a financial service provider. If a customer feels that he/she has not been properly treated, or that there are grounds for complaint for some other reason, then a complaint may be made to the financial institution concerned. If the customer is not satisfied with the response received from the institution, there may be grounds to forward the complaint to the Financial Services Ombudsman, who has statutory powers to investigate complaints against financial service providers. The Ombudsman will only consider a case once the internal complaints procedure within the financial institution concerned has been followed.

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