Dáil Éireann Debate, Wednesday - 28 April 2010
93 Deputy Catherine Byrne asked the Minister for Finance his views on whether increases in bank charges and interest rates are consistent with the banking policy; and if he will make a statement on the matter. [17130/10]
View answerCredit institutions are required to notify non-interest bank charges to the Financial Regulator for approval. When approving charges, the Financial Regulator takes the following criteria into consideration:
promotion of fair competition,
commercial justification,
the effect on customers or a group of customers.
Legal fees tend to be imposed by third parties and then passed on directly by the institution to the consumer. In general these do not require approval.
As regards interest rates wholesale interest rates are set by the European Central Bank (ECB). The setting of retail interest rates by banks reflects a number of factors. These factors include the fact that funding comes from different sources. Some of it is provided by the ECB and some of it comes via the inter bank markets at market rates. Individual institutions set rates based on their cost of funds and commercial considerations. Examples of commercial considerations they have to take into account are competition, risk pricing and what level of deposit interest they have to give to attract funds. They also have to generate some level of profit to ensure their commercial viability.
