Tuesday, 2 July 2013

Questions (74)

Jonathan O'Brien

Question:

74. Deputy Jonathan O'Brien asked the Minister for Finance his views on the recent increase in bank charges by AIB; and if he has had any contact with the bank regarding this increase. [31884/13]

View answer

Written answers (Question to Finance)

While the Government is acutely aware of the increasing financial stress that some households and businesses are facing in the current environment, ultimately the pricing of financial products, including customer account charges, is a commercial matter for the management and the Board of the Institution. As the Deputy will be aware the Relationship Framework with the bank provides that the State will not intervene in the day-to-day operations of the bank or their management decisions. These frameworks are published on the Department of Finance website. I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF.

I have been informed by AIB that these pricing changes will increase the average Maintenance and Transaction cost for fee paying personal customers by €0.75 per month and by less than €2 per month for business customers. These fee increases do not affect the circa 40% of personal banking customers in AIB who avail of free banking via, "a way to bank free of maintenance and transaction fees", if they are students or Advantage customers over the age of 60. Free banking offers also exist for start-up businesses and young farmers, while business customers have the option to negotiate fees on a case by case basis.

I have also been informed by the bank that for every ATM transaction the actual cost of providing the service is greater than the fee charged to customers for availing of the service. The bank also provides a guide on its website for customers on the way to reduce the cost of banking.

It should also be noted that the Central Bank of Ireland is required under section 149 of the Consumer Credit Act 1995 to approve any increases in bank charges and approval for these increases was received prior to the announcement last week.

In 2011, I requested that the Central Bank examine ways to improve Ireland's payment infrastructure. The Central Bank established a Steering Committee which prepared and submitted the National Payments Plan to me. Government subsequently approved the plan in April 2013 and my Department is now working to implement its recommendations.