asked the Minister for Finance if he is aware of the hardship and losses caused to many customers by the decision of the banks to disregard, for interest purposes, lodgments made or purported to be made during the recent closure; and what action he proposes to take in the matter.
Ceisteanna—Questions. Oral Answers. - Bank Interest.
16.
I understand that cheques written during the bank closure will be disregarded for the purpose of calculating interest due on overdrafts or interest to be paid on deposits during the period of the closure. I am not aware that these arrangements are causing hardship or loss as represented by the Deputy.
As I stated in reply to a question on 29th October, 1970, it will be open to bank customers, who are dissatisfied for good reason with the basis on which interest is charged on their accounts, to make representations to their banks. I am informed that the banks will consider such representations sympathetically.
If there is a case for considering individual cases as a result of representations then all cases should be treated on the same footing. The banks are having it both ways. They are charging interest on overdrawn accounts but they are disallowing people who endeavoured to lodge during the closure of the banks. This is operating quite unfairly in a number of cases.
I have dealt with this matter in the House before. Broadly speaking the position is that people who claim they could have reduced their overdrafts during the closure will be in the position that if they could have done so yet could not lodge the money in their banks they could have made interest on that money in other areas. In cases where people can establish that they had cheques which could not be cashed by lodging them in one of the non-associated banks they can make representations to the banks. I understand the banks intend to deal with such cases on a reasonable basis. If that is so I do not think there will be grounds for complaint but if there is an indication that the banks are not operating on this basis I shall certainly be prepared to pursue the matter further with them.
It is a little more complicated than that. Because of the delay in clearing cheques the banks calculate on what is known as a "commission decimal", on the basis of a thousand multiplied by twenty— twenty represents approximately three weeks. When interest is calculated on a half-yearly basis a person is charged interest on that decimal and this can add up to a considerable amount in some cases.
Is this irrespective of overdrafts existing at the time?
Yes.
I have not suggested that interest is not going to be charged on those overdrafts. I do not think it would be reasonable to suggest that it should not be, but if the Deputy's question relates to the manner in which the interest is normally charged, that is a separate question.
The Minister is suggesting that some people might have been able to use the money or defray the interest by alternative investment, but it is not open to everyone to lodge money in other banks such as the American banks.
I accept that but in cases where there was a reason why they could not do it, and there are a number of possible reasons, they will be in a position to make a case to their own banks. I think they will find their case will be accepted. If difficulty arises over this I shall be prepared to pursue it further with the banks.
Is it not true that the banks are making more money because they are collecting interest on this money yet they did not have to pay staff during that period? The Minister said that people could invest their money elsewhere but is it not true that most retailers kept the economy going by making money available instead of lodging it?
With regard to the first part of the Deputy's supplementary we do not know precisely how the accounts of the banks are going to work out but the indications are that they are not going to make any money out of the closure.
They had no wages to pay.
They have other things to pay and there was the settlement.
That is from now on.
No, if the Deputy is familiar with the settlement he will know that it goes back further than the reopening of the banks. The indications are, although we do not yet know precisely, that the banks will not have made any profit out of the closure. With regard to the second part of the Deputy's question, it is true that the provision of cash by various business firms contributed substantially to the continuation of ordinary commercial life. That is not to say, however, that such people are losing out under the arrangement I have suggested. It does not follow they will lose out.
But they are losing out on the profit on what they sold.
The Deputy is touching on one of the points now. They were making profits and if they had not had their money invested they could not have done that.