Aindrias Moynihan (Cork North West, Fianna Fail)
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157. To ask the Minister for Finance the process in place to prevent a monopoly by one or two Irish banks in the retail banking sector. [32584/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Programme for Partnership Government places consumers at the centre of the Government’s banking sector policies by focusing on the strengthening of consumers’ rights and knowledge, and fostering greater competition in credit provision through supporting non-bank credit providers and reducing the State's ownership of the banking system.

Statutory bodies play an important role in achieving these Government objectives. The Competition and Consumer Protection Commission (CCPC) has a dual mandate to enforce competition and consumer protection law in Ireland. Its mission is to make markets work better for consumers and businesses. A key aspect of consumer protection in relation to retail banking is ensuring that institutions are not abusing their market power and that competition is protected and enhanced in the long term interests of consumers. In that context, the CCPC recently published an in depth review of the residential mortgage market and set out a number of short, medium and long term options which could allow for greater competition from new entrants in the mortgage market, and could also encourage lenders to compete more vigorously on price, quality and innovation.

Furthermore, commercial banks are not the only option available to retail consumers. For example, the credit union sector offers sources of credit for the mutual benefit of its members at a fair and reasonable rate of interest.

The State is also promoting alternative 'non-bank' financing solutions in order to encourage competition in the banking sector. While this is initially focused on the SME sector, the increased competition will lead to improvements in the financial sector overall. In this regard, the Strategic Banking Corporation of Ireland (SBCI) is Ireland’s National Promotional Institution for SMEs, with a strategic mission to deliver effective financial supports to Irish SMEs that address failures in the Irish credit market.

The SBCI began lending in March 2015. To the end of March 2017, the SBCI has lent out €657 million to nearly 15,300 SMEs supporting the employment of over 67,000 people. SMEs in all sectors of the Irish economy benefit from SBCI finance through has three bank and five non-bank on-lenders. Most of the SMEs supported by the SBCI are based in all regions of the country, with 85% of them outside Dublin.

The SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving requirements of the SME finance market and contribute to a sustainable and competitive economy.

Moreover, the recent disposal by the State of 28.8% of its shareholding in AIB will not only help reduce our elevated national debt but, I believe, can also foster further competition in the Irish banking market, by removing any perception of State interference that might dissuade new entrants. This is a view that has also been highlighted by the CCPC in their recent ‘Options for Ireland’s Mortgage Market’ paper, in which they highlighted that the clear policy position as regards the sale of the State’s shareholdings in AIB has, “...also given a large degree of confidence to international investors and potential new entrants, who might otherwise have viewed State ownership as a real barrier to entry.”

The Central Bank is also playing an important role in protecting consumers, as identified in the Bank’s mission statement of ‘Safeguard Stability, Protect Consumers’. Since the widespread reforms that took place following the financial crisis, Ireland is now widely recognised as having a well regulated financial services sector, an important pillar underpinning the soundness of the banking sector and which is necessary to foster greater competition.

The Consumer Protection Directorate aims to deliver on its consumer protection mandate in the context of three important desired consumer protection outcomes:

- a positive consumer-focused culture that is embedded and demonstrated within all firms;

- a consumer protection framework that is fit for purpose and ensures that consumers’ best interests are protected; and

- regulated firms that are fully compliant with their obligations and are treating their customers, existing and new, in a fair and transparent way.

This framework puts the consumer at its centre, where the focus of firms must be on delivering positive consumer outcomes within a regulatory framework that is fit for purpose.