Vol. 471 No. 1
108 Mr. E. Byrne asked the Minister for Finance the progress, if any, which has been made regarding the development of a third banking force; the further proposals, if any, he has in this regard; and if he will make a statement on the matter. [20293/96]
The prime objective of creating a third banking force was to generate greater competition within the retail banking services market. The Government has been considering its options in this regard for some time with a view to identifying the most effective means of continually improving the level of competition in this market.
Within the general framework of competition policy, the Government has instituted a number of initiatives which are targeted at the creation of vibrant and competitive markets in all spheres of economic activity with the aim of promoting economic development in Ireland. The strengthening of the Competition Authority in the Competition (Amendment) Act, 1996 and the creation of a Director of Competition Enforcement are key developments in this regard. Specifically in relation to greater competition in the retail banking services market, the removal of statutory restrictions on services which can be provided by building societies which are now emerging as major players in all sectors of the banking market has resulted in major advances in the availability of services and improved access to those services. The Consumer Credit Act, 1995 has improved the level of transparency in relation to fees and the cost of credit and has brought this whole area within the remit of the Director of Consumer Affairs. The recently published Central Bank Bill will bring the central clearing system, operated under the auspices of the Dublin Bankers Clearing Committee, under the supervision of the Central Bank. The Bill will confer powers on the Central Bank in relation to the establishment, supervision, and operation of payments systems in the State. While the existing system has been examined by both the Competition Authority and the European Commission who have found that the operations of the system is not anti-competitive, the regulation of such a critical system within the banking sector by the Central Bank is appropriate. Finally, a Credit Union Bill, which is currently being drafted will broaden the range of services which credit unions can offer and which will contribute further to competition and liberalisation of the market.
The development of competition in the market place generally and in the retail banking services market specifically, is subject to continuing review to ensure that initiatives and statutory provisions currently in place are having the desired effect. If necessary, such provisions as are in place will be modified, the Competition (Amendment) Act, 1996, already referred to, being a case in point of such modification. Assessing the impact of existing and recently introduced provisions and the potential impact of alternative available options takes time. Moreover, the emergence of the building societies and the credit unions as major players in the personal financial services market has considerably changed the nature of the market and the availability of alternative competitively priced credit and service.
