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Bank Charges

Dáil Éireann Debate, Thursday - 20 February 2014

Thursday, 20 February 2014

Ceisteanna (94)

Terence Flanagan

Ceist:

94. Deputy Terence Flanagan asked the Minister for Finance his views on the reason banking is more expensive for customers of AIB and Bank of Ireland in the Republic versus Northern Ireland; and if he will make a statement on the matter. [8855/14]

Amharc ar fhreagra

Freagraí scríofa

Bank fees, charges and commissions are subject to regulation under Section 149 of the Consumer Credit Act 1995, as amended. Section 149 came into effect in 1996 and currently requires that credit institutions, prescribed credit institutions and bureaux de change must make an application to the Central Bank if they wish to introduce a new customer charge or increase any existing customer charge in respect of certain services. Section 149 does not apply to interest rates; it applies to fees, charges and commissions only.

My Department recently published a review of the regulation of bank fees and charges which is available on the website www.finance.gov.ie.

The review found that:

- net fee and commission income divided by average assets in Irish banks was well below the average of their peers; and

- net fee and commission are lower in the Irish banks than in their European peers relative to net interest income.

The review concluded that it would not be appropriate to repeal Section 149 at this time. The lack of competition in the banking sector means that the repeal of section 149 would give unfettered price setting power to the incumbent banks.  The report recommends that this issue should be revisited when competition in the banking sector has improved significantly. 

In addition to the above, I can confirm for the Deputy that I have also received the following feedback from AIB and BoI in relation to the cost of banking for customers in the Republic of Ireland versus Northern Ireland:

Allied Irish Banks:

"The Central Bank of Ireland published research in 2011 which compared personal current account charges applied by banks in the Republic of Ireland with those applied by a selection of banks in the UK and Northern Ireland. This research identified structural differences between the markets with customers whose accounts stay in credit paying slightly higher fees in ROI than GB and Northern Ireland but customers whose accounts go out of order are paying much lower fees in ROI than  GB and Northern Ireland. AIB pricing strategies for business and personal customers in GB and NI follow the prevailing structure for charging fees in those markets.

A Guide to Fees and Charges for Personal Accounts (including how to bank free of maintenance and transaction charges) can be found on AIB's website at http://www.aib.ie/personal/current-accounts/Personal-Current-Acc-Fees-Charge"

Bank of Ireland:

The current account markets in RoI and NI are not directly comparable; operating in different jurisdictions, cost structures and business and regulatory environments. The BoI Current Account proposition for RoI competes exceptionally well, reflects the market environment and provides good value to customers given the extensive range of services and solutions provided.  Customers have banking access through the largest branch and ATM network, telephone, online and mobile banking services in Ireland.  The Bank has been investing heavily in payments infrastructure (including SEPA), online and mobile propositions with further investment planned.  There has been a considerable increase in the functionality and service provided to Current Account holders in recent years including developments such as Visa Debit, payments to mobile and contactless transactions.  The RoI branch network of circa 250 outlets and phone contact centre are staffed by over 2,000 professionally qualified financial advisors around the country to support both personal and business customers".

The Bank of Ireland fees and charges can be found on the Bank of Ireland website at http://www.bankofireland.com/fees-and-charges-365-online/.

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