Competition Authority to probe excessive bank charges

THE Competition Authority is to probe excessive fees and uncompetitive practices in the Irish banking sector.

The authority will carry out a survey of the rates charged by Irish banks for overdrafts, personal loans and credit cards. The rates charged to business customers will also be examined.

The only research that has been carried out to date was by the Department of Finance in a report produced 18 months ago. The department’s report, which received no publicity at the time, found that Irish customers pay more for overdrafts, credit cards and unsecured personal loans than most other EU citizens.

The report found:

when it came to credit card rates, AIB and Bank of Ireland charged their customers over 50% more than other EU citizens had to pay.

Irish banks made more profits on overdrafts than every other eurozone country, bar Portugal.

Irish banks made the second highest percentage of profits on unsecured personal loans.

The Competition Authority’s plans to investigate the banking sector follow multiple complaints from business organisations and consumers.

The Competition Authority is, for the first time, actively considering how best to probe the competitiveness of the Irish financial and banking sector, a spokesperson said last night.

The Department of Finance report concluded that the high degree of concentration in the Irish banking market, with Bank of Ireland and AIB controlling over 80% of all Irish banking transactions, “does increase the danger of uncompetitive practices and possible over-charging of customers.”

Eddie Hobbs, director and financial spokesperson with the Consumer Association of Ireland (CAI), said Irish banks were unashamedly charging exorbitant rates for personal and business customers. Mr Hobbs also criticised the Central Bank for failing to protect consumers: “The Central Bank’s only concern is that Irish banks remain really profitable. They have never had any cultural intention to interface between Irish banks and the consumer.”

Irish Bankers’ Federation spokesperson, Felix O’ Regan, said not all Irish banking products fared badly when compared to European prices: “I’m not even going to start to tell you that there are not lower charges in other European countries because the fact of the matter is that there are but there are other factors involved.”