Action needed to stop banks using customers as profit fodder

‘The Government must act to prevent the Banks using consumers as profit-fodder’ Labour Party Spokesperson on Finance, Joan Burton has said.

Deputy Burton was welcoming the publication of a consultation paper on the banking system by the Competition Authority.

“There is an urgent need to accelerate this process’ said Deputy Burton. ‘The Competition Authority study has been on-going since September last year. The first two phases of the study are now complete, but phases three and four remain to be carried out. It is vital that the Government ensure that the competition authority has the resources to bring this study to completion at the earliest possible time, and to move quickly on its recommendations’

‘”In the meantime, the Government should bring forward as a priority the promised Central Bank and Financial Services Authority of Ireland (No. 2) Bill. This legislation is intended to set up a statutory Financial Services Ombudsman and Consumer Consultative Panels.

“An efficient and competitive banking sector is vital to the health of our economy. The cost of banking is a serious issue for many small businesses. Having a bank account is now almost mandatory for Irish households, especially given the number of employees who are now paid directly into a bank account. In these circumstances, we cannot allow consumers to be used as profit-fodder by the Banks, which is what will happen unless there is real competition among the banks.

“There are strong grounds for concern about competition in the sector, including the problems identified earlier this year in the pass-on of interest rate cuts to consumers. There are also significant barriers to entry in the structure of the cheque-clearing system, and in the bureaucratic problems facing customers who seek to move between banks. A key issue is the lack of transparency with respect to charges, and the problems customers face in comparing the true cost of banking services.

“The Government needs to move more quickly on this issue. It needs to properly resource the Competition Authority, and it needs to accelerate the bringing forward of its own legislation. Unfortunately, its main contribution in this area in recent times has been the hiking of duties on ATM and Credit cards, in the hope that consumers wouldn’t notice.”