Written answers

Thursday, 6 May 2021

Photo of Alan DillonAlan Dillon (Mayo, Fine Gael)
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50. To ask the Minister for Finance his plans to increase transparency on retail banking fees and charges associated with personal pension products; if engagement has taken place with financial institutions on reducing such charges; and if he will make a statement on the matter. [23468/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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All credit institutions in Ireland are independent commercial entities and I have no statutory role in relation to the charges applied by credit institutions. Section 149 of the Consumer Credit Act 1995 requires that credit institutions and bureaux de change 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. In fulfilling its statutory role under the Act, each notification received by the Central Bank is assessed and robustly challenged in accordance with the specific criteria set out in Section 149 of the Act.

Having considered the proposed charge(s) under the assessment criteria, the proposed charges are either rejected, approved at lower levels than requested by the entity or approved in full. Approvals are issued in the form of a letter of direction and the entity is legally bound to comply with this letter of direction. The letter of direction sets out the maximum amount the credit institution is allowed to charge. Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion.

In addition, all regulated entities are required to comply with the Central Bank’s Consumer Protection Code 2012 (the Code). The Code states that a regulated entity must ensure that in all its dealings with customers and within the context of its authorisation, it makes full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer. Where a regulated entity intends to introduce new charges or increase any existing charges, under provision 6.18 of the Code, it must give notice to affected consumers of the introduction of any new charges or of increases in charges, specifying the old and new charge, at least 30 days prior to the charge taking effect. The regulated entity’s ‘terms of business’ document as required by the Code must include a general statement of the charges imposed directly by the regulated entity. Prior to providing a product or service to a consumer, a regulated entity must provide the consumer, on paper or another durable medium, with a breakdown of all charges which will be passed on to the consumer. A regulated entity must display in its public offices a schedule of their fees and charges, and this schedule must also be placed on its website.

The EU (Payment Accounts) Regulations 2016, transposing the Payment Accounts Directive, introduced new rules in relation to transparency and comparability of fees connected to payment accounts. These include a requirement to give consumers a fee information document before they open an account as well as a requirement to give consumers, free of charge and at least once a year, a statement of fees for the services linked to the consumer’s payment account.

I would encourage all bank customers, particularly those adversely affected by changes in bank charges, to shop around and compare the fees and benefits of the different current accounts available. The Competition and Consumer Protection Commission (CCPC) website provides useful information to assist customers to compare and switch accounts. My Department has also run two media campaigns as part of a range of competition measures agreed with the European Commission to raise awareness and promote customer switching in the retail financial product area and the campaign website www.switchyourbank.ieprovides straightforward practical information and support on switching and I would strongly encourage people to visit it. The Central Bank’s Code of Conduct on the Switching of Payment Accounts with Payment Service Providers sets out protections for consumers who switch payment accounts.

The Interdepartmental Pensions Reform and Taxation Group, chaired by my Department, published its Report on supplementary pensions in November 2020. This provides a number of recommendations and conclusions to help advance the aim of simplifying and harmonising the supplementary pension landscape in Ireland. It seeks to improve regulatory oversight and reduce costs which in turn should lead to better retirement outcomes for pension savers. The complexity of pension products, which currently requires a high level of intermediation between the consumer and supplementary pension providers, drives up costs for some consumers through payments of fees and commissions for intermediation and advice services. Reducing the number of schemes and rationalising pension products will help diminish such complexity, enhance market competitiveness, drive product efficiencies and in turn should lead to better retirement outcomes for pension savers. The Group is actively working on implementing a number of those recommendations with a view to addressing some of those highlighted issues.

Section 92 of the Pensions Act 1990 provides for the approval process for PRSAs. The Pensions Authority and Revenue are jointly responsible for approving PRSA products. Potential new PRSA product providers must meet with the Authority prior to submitting an application for PRSA product approval. The Pensions Authority supervises the activities of PRSA providers in relation to their approved products and monitors compliance with PRSA legislation. The Central Bank of Ireland is responsible for the prudential supervision of PRSA providers and the supervision of the sales process of approved PRSA products. The Pensions Authority publishes on its website a list of all PRSA providers, the products offered by each provider, and the charges (contribution and fund) related to each PRSA product.

Separately, at the European level, my Department is supportive of the Pan-European Personal Pension Product regulation which will introduce standardisation and harmonisation of key information on costs and fees on such products across the Union. Work on this has commenced and is ongoing in my department.


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