asked the Minister for Finance if he has any plans to amend the Central Bank legislation to control or regulate the charges made by banks; and if he will make a statement on the matter.
21.
Ceisteanna—Questions. Oral Answers. - Bank Charges and Interest Rates.
15.
asked the Minister for Finance if he proposes to review the legislation governing the Central Bank and financial institutions to enable greater Government control of bank charges and interest rates; and if he will make a statement on the matter.
I propose to take Questions Nos. 15 and 21 together. I do not propose to review the legislation governing the Central Bank and financial institutions to enable greater Government control of bank charges and interest rates.
Interest rates are influenced by several factors, mainly external. I do not see any need to modify the existing arrangements under which primary responsibility for the level of bank interest rates rests with the Central Bank.
I would remind Deputies also that the Government decided on 16 January that all exclusions, including banking, from the Restrictive Practices Act and the Prices Acts should be removed. This will mean that the new Fair Trading Commission will have power to examine charges and any arrangements between financial institutions that might be contrary to the public interest.
Would the Minister agree that the very substantial increases in bank charges, other than interest rates, in the past year or two have been against the public interest and is he aware of complaints by companies, retailers and individuals about these charges?
I am aware of these complaints but I have lost sympathy with businesses who find that the amount they have to pay for services previously provided in relatively small amounts has increased considerably. However, I understand that what the banks have done is to try to price the various charges at their actual cost to them so that each individual service provided by the bank pays for itself as an independent cost covering centre. The result has been that services that were previously cross-subsidised from other banking business have increased quite dramatically. Though it is regrettable that any business — banking is a business — should try to ensure that each service provided would pay for itself, we should not have to accept that statement from the banks and that is why the Government decided to ensure that the banks will be properly scrutinised by bringing them within the ambit of the new fair trading legislation. For many years fair trading legislation has been introduced here which dealt with every sector of the economy, virtually, except the banks and certain public sector services. I am glad to say that the new fair trading legislation will ensure that banks and public sector companies will be investigated in exactly the same way as any suggested private monopoly might have been.
Would the Minister agree that one of the complicated factors at present in regard to Irish banking services is that we are within the EMS whereas the British banking system and Britain's entire currency system are outside the EMS? Obviously, the entry of Britain to the EMS would facilitate all banking transactions to quite a considerable degree, reducing the cost of services. Has the Minister any up-to-date information on any movement which would indicate that sterling would move into the EMS?
I am not sure of the evidence on which the Deputy bases his argument that the cost of cheque handling in Irish banks would be affected by British membership of the EMS. I do not think there is much evidence to that effect. I will take the bait, just the same, and answer the Deputy's question. It would be desirable, not just from the point of view of Ireland but of Europe and of Britain, that Britain would become a member of the EMS. The whole purpose which prompted the Irish Government and the Opposition of the day to join the EMS was the creation of a zone of monetary stability in Europe which would be conducive to investment. Clearly, it would be desirable for Europe as a whole if Britain decided to join the EMS. We, as a member of the system, would be very happy to see that occurring. I cannot say what are the intentions of the British Government in this regard.
Does the Minister not consider there is a rip-off in banks where they charge interest for debits in current accounts but do not allow interest on credits in current accounts? What are the Minister's comments on that?
It is a matter each individual account holder should discuss with his bank manager. It is possible to get a system of balancing or account transferring to ensure that one avoids paying charges when one should not pay such charges. It is a matter individuals should seek to negotiate with their bank managers. If there is evidence that the banks are behaving in an unreasonable way in respect of individual customers——
It is the system they have imposed.
——the Deputy or the citizen concerned should write directly to the Central Bank about the matter, to me or to the Restrictive Practices Commission.