Vol. 316 No. 2
asked the Minister for Finance if he will arrange for publication of rates of handling charges, commissions, and so on; chargeable by financial institutions in respect of transactions handled on the foreign exchange markets by such institutions on behalf of customers and if he will make a statement on the matter.
5.
asked the Minister for Finance the controls exercised over finance houses, banks and credit institutions dealing in foreign exchange to ensure that excess profits are not being made by way of handling charges, commission, and so on.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 4 and 5 together.
The Central Bank have requested all banks to ensure the free availability to customers of full details concerning bank charges, fees and commissions. I am advised that since early 1978 the four associated banks have been providing separate brochures on foreign exchange services, giving full details of the charges associated with these services and that copies are available in bank branches. I understand that all other licensed banks engaged in foreign exchange business provide similar information.
Bank charges, including those related to foreign exchange services, are subject to surveillance by the Central Bank. The Central Bank require that applications for increases in charges be accompanied by detailed data on the costs and revenues associated with the provision of the service. The bank assess applications on the basis of these data and in the light of other relevant considerations, including the profitability implications of the proposals.
Is the Minister satisfied that the various charges are not excessive?
As I have indicated, this is a function of the Central Bank, but I am advised by them that they keep this under surveillance. There is a relatively new situation now occurring, on account of the breaking of the link with sterling. The Central Bank announced in their latest annual report that they agreed that existing foreign exchange charges would be applied to sterling transactions with effect from 2 April 1979 and that costs and revenues associated with the provision of foreign exchange service would be examined on the basis of data for the three months thereafter. That examination, I understand, is not yet complete but is nearing completion.
Would the Minister agree that due to our entry to the EMS the number of foreign exchange transactions have increased substantially and that if proper control is not established between the Central Bank and the commercial banks there is a danger of excess profits being earned by the banks simply because of the increase in volume?
I agree that there has been a substantial increase in the number of foreign exchange transactions as a result of the breaking of the link with sterling. As I have indicated, the Central Bank are engaged in a review of the operation involved for the first three months, taking into account in particular the element of profitability. I expect the result of that review will be completed shortly and depending on the outcome of the review, there may be certain changes in the charges.
Will the review be made public, as it should be?
As I indicated it is a matter for the Central Bank who have the statutory responsibility. I am not sure if the full terms of the review will be made public but clearly any changes in charges will have to be made public.
In my opinion the commercial banks are on to a bonanza because of our entry into the EMS.
Is the Minister aware that in the Central Bank there is an officer specifically charged with investigating complaints from the public about the practices of the associated banks? Might he urge the authorities concerned to make this official and make his services more widely known to the public?
I think there were complaints and difficulties in the early days but this was inevitable and the level of complaints was less than might have been expected. Efforts were made to deal with these complaints. I am not aware that there is any substantial volume of complaints at present.
