Central Bank probe raises concerns over unfair charges

THE Central Bank has raised concerns over current account charges being imposed by Irish banks, but has stated that it has found no instances of overcharging.

In the findings of an investigation into so-called ‘out-of-order’ charges — which are applied when customers breach their account limits — the financial watchdog didn’t name specific banks.

However, it noted that it examined three out-of-order charges — namely, surcharge interest, referral /over limit fees and unpaid item fees — across 300 customer accounts held in five banks.

Such charges are more likely to be imposed on customers who are in financial difficulty and may be struggling to keep a positive balance on their current accounts.

The main findings of the probe highlighted some cases of “unfair” charging — relating to referral fees and surcharge interest — and charges which weren’t in customers’ “best interests”. However none of the charges breached codes or terms and conditions.

“While our inspection didn’t identify any overcharging, we weren’t satisfied with the way in which some charges were applied across some of the banks inspected and we have directed the relevant banks to change their practices,” said Bernard Sheridan, director of consumer protection at the Central Bank.

“Consumers need to be aware that they will incur out-of-order charges when they don’t have sufficient funds in their account to meet outgoing payments. It’s important consumers keep an eye on their bank accounts and take steps to avoid such charges where possible,” he added.

The latest charging investigation found some banks falling on ‘best practice’ implementation.

“All banks were encouraged to enhance the ways in which they assist customers to avoid incurring out-of-order activity fees, particularly in the current economic climate. Where banks identify customers who are repeatedly incurring such fees, banks should be pro-active in contacting those customers, not only to advise of the fees that have been applied, but with a view to putting a long-term solution in place that is beneficial to the customer,” the Central Bank added.