Bank rip-off probe to be published

AN OIREACHTAS probe into excessive bank charges is to be completed this month and published in the first week of February.

An investigation by the Oireachtas Finance and Public Service Committee has heard from all relevant parties, including all the major banks, and will publish its recommendations next month.

Likely to be prominent among the committee’s criticisms is the bank’s failure to pass on European interest rate cuts.

Last summer, the committee heard that slowness in passing on interest rate cuts had cost consumers €1 billion in extra interest charges.

The average personal customer pays about 50 a year in non-interest bank charges, but a mortgage holder can lose that amount in just one month if a 0.5% cut is not passed on.

The committee also heard that although European Central Bank (ECB) rates fell from 4.7% to 2% in the last two-and-a-half years, banks passed on just half of that reduction to customers while continuing to increase their own interest charges for banking services.

The extent of the rip-off by financial institutions is also the focus of an investigation by the Irish Financial Services Regulatory Authority (IFSRA).

The IFSRA is also set to challenge the banking sector and promote competition by publishing league tables comparing the cost of banking services and encouraging customers to move their business to the cheapest option.

A separate investigation into the competitiveness of Irish banks was launched last year by the Competition Authority after it was revealed Irish credit card and overdraft charges are among the highest in Europe.

AIB and Bank of Ireland defended themselves against charges of operating in a cartel-like manner. AIB general manager of retail banking John Hickey said the bank’s charges compared favourably both internationally and domestically.

However, Bank of Scotland chief executive Mark Duffy said there were serious problems in the Irish banking market.

The Finance and Public Service Committee will meet today to consider the testimony and evidence gathered before finalising its final report.

Committee chairman Sean Fleming said the report would also focus on the level of overwhelming personal debt being accumulated by those who could least afford it.