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Bank Charges

Dáil Éireann Debate, Thursday - 28 February 2019

Thursday, 28 February 2019

Questions (50)

Pearse Doherty

Question:

50. Deputy Pearse Doherty asked the Minister for Finance if the changes in fees structure to move the area in which fees are levelled on each transaction for account holders with less than €3,000 in their account by a bank (details supplied) were notified and approved by the Central Bank; and if he will make a statement on the matter. [10056/19]

View answer

Written answers

Bank fees, charges and commissions are subject to regulation under Section 149 of the Consumer Credit Act, 1995 (the Act) as amended.

The Central Bank has advised that they cannot comment on individual entities.

In fulfilling its statutory role under the Act, the Central Bank assesses each notification received from a credit institution pursuant to the Act, where they wish to introduce any new customer charge or increase any existing customer charge in respect of certain services, in accordance with the specific assessment criteria set out in the Act.

Under the Act, credit institutions must notify the Central Bank if they wish to:

- Introduce any new customer ‘charge’ for providing a service, or

- Increase any existing customer ‘charge’ for providing a service.

‘Service’ means any service provided by a credit institution to a customer in respect of the following -

a. Making and receiving payments;

b. Providing foreign exchange facilities;

c. Providing and granting credit;

d. Maintaining and administrating transaction accounts used for the services specified by this subsection, including issuing statements.

‘Charge’ includes a penalty or surcharge interest by whichever name called, being an interest charge imposed in respect of arrears on a credit agreement or a loan, but does not include any rate of interest or any charge, cost or expense levied by a party other than a credit institution in connection with the provision of a service to the credit institution or the customer and that is to be discharged by the customer.

Relevant charges are assessed by the Central Bank in accordance with the specific 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

- a credit institution passing any costs on to its customers in proposing to impose or change any charge.

Having considered the proposed charge(s) under the assessment criteria as set out under the legislation, the proposed charges are either rejected, approved at lower levels than requested by the entity or approved in full.

Approvals are issued in the form of a letter of direction and the entity is legally bound to comply with this letter of direction. The letter of direction sets out the maximum amount the credit institution is allowed to charge. 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.

If customers are unhappy with their current account provider for any reason, including cost, they have the right to switch to a different provider.

The website of the Competition and Consumer Protection Commission (CCPC) lists the various charges imposed by the various financial institutions in Ireland for different types of transactions www.ccpc.ie.

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 look at this comparison site with their specific circumstances in mind in order to decide which institution offers the best product for their pattern of account usage. My Department has run two media campaigns as part of a range of competition measures agreed with the European Commission to raise awareness and promote customer switching in the retail financial product area. This was agreed in the context of the restructuring plans for AIB and PTSB. The campaign is being funded entirely by the two banks. The campaign website www.switchyourbank.ie provides straightforward practical information and support on switching and I would strongly encourage people to visit it.

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