Survey fails to reflect reality

NOT for the first time, the beleaguered customers of Irish banks are being told by the country’s financial institutions they are getting a good deal compared with their European counterparts.

A cynic might be tempted to respond "they would say that, wouldn't they".

According to the findings of a survey, the personal charges paid by Irish customers are among the lowest in Europe.

It is worth bearing in mind, however, that this comparative study of 53 banks in 13 countries was commissioned by the Irish Bankers' Federation.

Whether the banks like it or not, the reality is most Irish people believe their charges are too high.

Given the complexity and international dimension of the data, it is debatable if this study provides a meaningful breakdown of the Irish banking scenario versus that in Europe.

For instance, while the study covers a range of four items provided by the five Irish banks involved current accounts, personal terms loans, credit cards and home mortgages more than 40% of the European banks do not provide the same span of products. In this respect, the comparisons are somewhat limited.

Another flaw is the fact that five of the 13 countries surveyed are outside the eurozone and operating different interest rate regimes to Ireland.

Furthermore, while Germany was included in only one category, France, Italy and the Netherlands were not assessed at all. That omission poses further questions about the findings.

An analysis of current account charges found Ireland ranked fourth cheapest of eight countries at 22.5% below the European average. In term loans the Irish banks were 0.3% above the EU average and the fifth lowest of nine. Irish credit card costs were fourth cheapest at 1.03% above the European average.

Arguably, the inclusion of more countries from the eurozone would have given a more valid financial comparison.

Another drawback was the failure to assess either the profitability or quality of service offered by banks in different states.

It is also notable that the IBF survey provides no information on the levels of competition on the vexed question of customer charges between the Irish banks.

The perception that people in this country are paying through the nose for banking facilities are borne out by the latest price index survey, which shows the cost of financial services here, including bank charges and commission, jumped by 23% in the year up to January.

It would be simplistic to tell people to shop around for better value. The personal relationship between clients and bank managers and the necessity to re-build a credit history deter most customers from changing banks.

Clearly, however, there would be a revolution in France or Italy if their financial institutions were raking in the huge profits that are rolling into the coffers of Irish banks on the backs of their customers every day.