Bank rip-off exposed in EU survey

BANK customers are being ripped off by a combination of complex pricing, hidden charges and inappropriate advice, according to a major EU report.

The problem is so bad that even experts carrying out a survey for the European Commission could not understand the real cost of accounts in nearly 150 of the 224 banks surveyed.

When it comes to selling financial products, such as savings and pension schemes, almost three-quarters of bank staff surveyed admitted their advice was based on the size of the commission rather than what would be best for the client, the report finds.

It goes on to suggest that information on the websites of the four Irish banks in the study was so obtuse that even the professionals were confused.

Last night, a spokesman for the Irish Banking Federation (IBF) said Irish banks fared extremely well in the EU-wide study.

“When you look at the price comparisons in the various banking categories covered in this report, Ireland is coming in significantly below the EU average,” said Felix O’Regan, head of public affairs, IBF.

“In most if not all of the graphs, Ireland is in the lower bracket. We have not fared badly at all,” he said.

The study found charges are lowest in the countries where banks’ dealings are transparent and simple to understand.

In Ireland — where the number of complaints about financial advice received by the financial regulator doubled last year compared with 2007 — 65% of complaints investigated found the consumer was right.

The reason, the study suggests, was that in many cases the professional did not understand the products they were selling and pushed the one that earned them the biggest bonus.

The study compared the real charges customers were paying for current accounts and analysed how transparent and intelligible the information they were given.

Irish consumers pay an average of €82 a year in bank charges — leaving them 13th in the EU 27 countries. Despite better value accounts being available, only 7% of Irish customers switched in the previous two years as compared with an EU average of 9%.

EU consumer commissioner Meglena Kuneva blamed a lack of transparency and the fact that banks make the whole procedure difficult as the primary reason for bank customers’ reluctance to change banks.

“There is widespread evidence that basic consumer principles are being violated with problems from complex pricing to hidden charges and information that is unclear and incomplete.

“Banks need to put their house in order with a culture change in the way they treat customers. And member state authorities need to fulfil their obligation to enforce EU consumer laws.”