Bernard Durkan
Question:112. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which bank charges are in line with charges in other jurisdictions; and if he will make a statement on the matter. [1813/16]
View answerThursday, 14 January 2016
Questions (112)
Written answers
All credit institutions in Ireland are independent commercial entities and I have no statutory role in relation to the charges applied by credit institutions. Section 149 of the Consumer Credit Act 1995 requires that credit institutions, prescribed credit institutions and bureaux de change must make a submission to the Central Bank if they wish to introduce any new customer charges or increase any existing customer charges in respect of certain services. Section 149 does not cover interest rates rather it applies to fees and commissions only. The Central Bank may direct the institution not to impose the new or increased charge or it may approve the charge, or approve it at a lower level than requested by the institution. Once approved, the bank is entitled to impose the charge.
Relevant charges are assessed by the Central Bank in accordance with the assessment criteria laid down in the legislation as follows:
- the promotion of fair competition between credit institutions;
- the commercial justification submitted in respect of the proposal;
- the impact new charges or increases in existing charges will have on customers; and
- passing on costs to customers.
Credit institutions are legally bound to comply with Letters of Direction, which set out the maximum amount the credit institution is allowed to charge for the relevant service. Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion.
My Department published a report on the review of the regulation of bank fees and charges in December 2013. This contains a detailed description of the process by which the Central Bank makes decisions on whether or not to approve proposed charges. It is available on my Department's website at www.finance.gov.ie. Among the key findings of the review was that while fee and commission income has become a more important source of income to the banks in recent years, net fee and commission income in Irish banks was well below the average of their European peers.
The European Communities (Payment Services) Regulations 2009 (the Payment Services Regulations) include requirements for banks and other payment institutions to provide information to the consumer about charges, interest and exchange rates on the accounts and these are reflected in the Central Bank's Consumer Protection Code 2012, which contains requirements in relation to the provision of information on charges to consumers. The revised Payment Services Directive (known as PSD2) was published in the Official Journal on 23 December 2015. Member States will be required to transpose the Directive by January 2018. Among its other objectives, PSD2 is expected to promote competition, meaning increased choice and better conditions for consumers and businesses.
Irish financial institutions have varying models for charges and have different regimes and conditions under which they are willing to grant transaction free banking. Individuals' use of their bank account will be specific to each individual and I would strongly encourage people to shop around for the best deal for them. In this regard, the CCPC website, www.consumerhelp.ie is a valuable resource.