BOSI calls for cheaper banking

BANK of Scotland (Ireland) continued its drive yesterday to bring cheaper banking to the Irish consumer.

Its assault on the Irish mortgage market is saving consumers in Ireland about €350 million a year.

Bank of Scotland told the Joint Oireachtas Committee on Finance and the Public Service that Ireland should follow the banking practices adopted in Britain in the early 1990s.

It wants the easy transfer of current accounts between banks, access to the money transmission system, from which they are excluded, by the existing Irish banks and greater transparency in the Irish market.

Chief executive Mark Duffy, whose bank has been linked to a bid for Irish Life & Permanent, said yesterday there could be good news on the way for Irish consumers, provided we shift towards the British model.

That depends however on the banking system here adopting practices allowing customers to transfer current accounts with ease. This takes 17 days at present in Britain and within another few years, 24-hour transfer from one bank to another will be on offer, he said. Mr Duffy is also unhappy with the difficulty getting into the money transmission system.

The operators, Irish Payment Services Organisation, made up of the big banks and others, want BOSI’s business plan before they will consider giving them access, which Mr Duffy said was totally unrealistic.

“You should not be asked to give your business plan to your competitors,” he said.

Stewart MacKinnon, chief executive of the Irish Payment Services Organisation, accused Mr Duffy of exaggeration.

He said IPSO required BOSI’s clearing plan, that is the number of cheques it expects to put through the system over the next five years, and not its full business strategy.

On entry costs to the system, Mr MacKinnon accused Mr Duffy of wanting something for nothing and “looking for a free ride”.

Mr Duffy said the transfer of current accounts was the surest way of injecting competition into the market.

He warned against the dangers of too much legislation to impose price controls. That results in a ‘one price fits all’ scenario with players in the market pitching their charges at the maximum permitted level.

At present AIB and Bank of Ireland control 80% of the Irish current account market. One of the major reasons for this is the huge difficulty in getting banks to facilitate the transfer of account details to another bank.

Mr Duffy said if people can shift their accounts it will force greater competition into a market which pays no interest on credit balances. He said BOSI has a reputation for giving the Irish consumer a good deal and he wants a “level playing field” to ensure his bank can continue to deliver value to the Irish public.