asked the Minister for Finance if he is aware of a recent decision by the Associated Banks to raise bank charges for certain services to customers including the drawing of cheques and lodgments and the serious increases in costs which will result for private persons, farmers, business, trade and industry; if he was consulted beforehand about this action; and what action he proposed to take in the matter.
Ceisteanna—Questions. Oral Answers. - Bank Charges.
27.
I am aware that a revised system of charges for current accounts has been introduced by the Associated Banks with effect from 1st April. The proposals were cleared with the Central Bank before being announced and I understand that they take full account of the Bank's views. While I was not consulted directly, I was kept fully informed of developments.
This is the first increase in charges since 1964 and I am satisfied that they are generally reasonable in scope. I do not agree that they will result in serious increases in costs for bank customers. The Central Bank in considering the matter had particular regard to the implications for bank customers and for the economy as a whole. Provision has been made to limit the charge to £1 per half-year in the case of accounts with less than 50 transactions during that period. It is also proposed to make an allowance for credit balances where an account is continually in credit to the extent of at least £100. These proposals should moderate substantially the impact of the new system on the majority of customers, particularly private individuals, farmers and small businesses.
Is the Minister aware that for transactions in excess of 50 up to 3,000 the extra charge is 50p for each ten transactions or portion thereof, including the first 50 transactions? That is to say, that 51 to 60 transactions would bear a charge of £3, £1 for the 50, while the total charge would amount to £3. In fact, in certain cases the increase amounts to 200 per cent.
I think one may, in cases like this, pick out particular cases where increases may seem to be very substantial, but taking the system as a whole and the bank customers as a whole and, in particular, people with small accounts and small numbers of transactions, the two factors in the arrangements which I have mentioned, namely, the charge of £1 for up to 50 transactions and the allowance where there is at least £100 in credit continually, operate to reduce the impact. As far as the bulk of customers are concerned I am satisfied, on the advice available to me, and the views of the Central Bank, that the changes are not unreasonable.
Does the Minister not agree that the amount of £100 in credit is nowadays a very small figure for, say, small businesses or even private transactions? This decision only leaked out and has not been notified to customers. Does it not seem strange that a decision of this character has been reached without official notification to customers?
I must confess I was not aware that this had not been communicated to customers. If what the Deputy says is correct, I think it is a little odd on the face of it. I agree with what the Deputy says, that £100 at the moment is a relatively small amount for businesses and so on, but it is for that reason that I think it will benefit, because it is where there is £100 credit as a minimum continually that people will get the benefit of this arrangement.
Could the Minister say, where an account is in credit, what interest will be calculated? Will it be borrowing interest or loaning interest?
No, I cannot say.
I understand it is 2 per cent.
That is very low.
It is a current account, not a deposit account.
(Cavan): Will the Minister consider taking steps to notify many simple people in this country who have amounts of money lying in deposit in the banks that if they put that money in one of the finance houses associated with the banks they could get at least double the amount of interest?
That is a separate question.
(Cavan): It may not be relevant on this question but it is certainly a very relevant question.
I doubt if that would be a proper function of the Minister for Finance.
(Cavan): Does the Minister agree that many simple people who have been doing business with the banks for years are losing very considerable amounts of money by leaving their savings lying at miserable rates of interest with the banks?
This could be so.
And the bank service is deteriorating all the time, unfortunately.