Written answers

Wednesday, 24 October 2012

Department of Finance

Financial Services Regulation

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance the extent of Central Bank of Ireland supervision and control over bank fees and charges for retail customers in the context of diminished competition due to the reduced number of banks providing retail banking services here. [46768/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Central Bank has advised me that under Section 149 of the Consumer Credit Act, 1995 (as amended), credit institutions and bureaux de change must notify the Central Bank if they wish to:

- Introduce any new customer ‘charge’ for providing a service or

- Increase any existing customer ‘charge’ for providing a service.

The Central Bank assesses these charges based on four criteria set out in the legislation:

- The promotion of fair competition;

- The commercial justification submitted in respect of the proposal;

- The impact new charges or increases in existing charges will have on customers;

- Passing on costs to customers.

The Central Bank may either approve or reject an institution’s application under Section 149; an institution may choose not to apply charges for which it already has approval for commercial or competitive reasons and then subsequently apply such charges in its own time. However, an institution may choose to apply such internal account structures at its own discretion and so the Central Bank has no power in this area to approve/reject such revisions.

In December 2011, the Central Bank of Ireland published the findings of research into charges applied by the main retail banks to personal current accounts. The research found that customers whose accounts go into an unauthorised overdraft position pay the highest fees. The highest current account costs occur when consumers have high numbers of out-of-order transactions occurring on their account such as unauthorised overdrafts, unpaid direct debits and over-limit or referral fees. Customers may make savings by using electronic transactions in place of manual transactions, where possible.

If customers are not satisfied with their current account provider for any reason, including cost of fees, they have the right to switch to a different provider. A copy of the Central Bank’s Consumer Protection Code including Code of Conduct on the Switching of Current Accounts with Credit Institutions and a review of personal current account charges is available on the Bank’s website www.centralbank.ie .

Notwithstanding the fact that the State is a significant shareholder in some banks, it is imperative that all banks are run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset to the State.

Comments

No comments

Log in or join to post a public comment.