Consumer and financial experts have called on regulators to probe the grip held by AIB and Bank of Ireland on the banking market. The calls come after ECB head Mario Draghi told the Oireachtas Finance Committee on Thursday that a “quasi-monopoly” was driving up the costs of credit for homes and business borrowers.
Policy and council adviser with the Consumers’ Association of Ireland, Dermott Jewell said there has been no real competition since the end of the crisis and that the Competition and Consumer Protection Commission should investigate. Financial expert Brendan Burgess called for the Central Bank to ban lenders from offering cash-back mortgages, saying the products allowed banks to charge more. He wants a review of the home repossession laws because lenders have long argued that the regime drives up their lending costs. However, Mr Burgess said any competition probe would achieve little.
New Central Bank figures showed Irish banks charge 3.08% on new mortgage loans, much higher than the average eurozone rate of 1.76%. Central Bank governor Philip Lane said yesterday lenders had left the market during the crash and cleaning up bad loans and economic recovery would help improve conditions for new entrants. He echoed Mr Draghi’s comments for the need to drive on with European banking union and capital markets union.
The commission signalled that after its 2017 report that a new probe was unlikely. “The issues highlighted at Thursday’s Oireachtas Finance Committee are not new, as the lack of competition has been a feature of the Irish mortgage market for many years,” it told the Irish Examiner.
“The Competition and Consumer Protection Commission shares the view that there is not enough competition in the mortgage market. To address this and to encourage new mortgage lending initiatives, we suggested actions which could be taken by the Central Bank of Ireland and the Department of Finance. Actions were also taken by the commission in terms of providing assistance to consumers to switch their mortgage provider, where possible, which further stimulates competition,” it said.