Banks accused of 'operating like a club'

Ireland’s banks were today accused of “operating like a club” and anti-competitive practices.

The charge was made by the Government-appointed Director of Consumer Affairs, Carmel Foley.

In a submission to a report on the banking system by the Competition Authority, she also said the banks used rules and structures to keep out competition.

Ms Foley’s comments marked the second attack on bankers in successive days.

Yesterday, the Small and Medium Enterprises lobby group claimed they were being charged the highest interest rates in Europe – while banking profits were among the highest.

The organisation alleged: “Lack of competition adds up to a positive influence for the banks, but it is bad news for small and medium businesses because we are being hit by high interest and low deposit rates.

“When we compared the European Union figures, Irish ISMEs were being charged 8.9% on average, as against about 5% across the EU.”

The Irish Banking Federation in response said the statistics used by ISME were unreliable.

Today Ms Foley expressed “serious concern” about the way the retail payments and clearing system in Ireland was owned and operated by the banking industry itself.

She said new institutions could not access the banking system in Ireland unless they were sponsored by the big banks, adding: “This would not be accepted in other sectors of the economy.

“This part of the structure should be run in the public interest by a regulator.

“I am delighted there is a spotlight on the practices in the system here. It is in the interests of the consumer.”

The Competition Authority’s report, being published later today, was expected to highlight a number of areas in which competition in the Irish bank sector was not working as well as it could or should be.