Watchdog fears bank review will lead to hike in fees
THE Consumers' Association has expressed concerns about a Government-backed review of the regulation of bank charges amid fears fees could be hiked at will.
The reported review comes after the latest IMF report on Ireland highlighted the State's "restrictive fee approval process" and stated that a review of how other countries regulate fees will be completed by the end of the year.
Under current laws, the State's banks have to make a submission to the Central Bank if they want to increase charges.
Altering current legislation could make it easier for the banks to increase charges.
The Consumers' Association of Ireland said banks have already significantly cut back on face-to-face interaction between customers and staff, and pushed costs on to consumers.
"Any suggestion that further charges be introduced, you have to be asked for what," said Dermott Jewell, Consumers' Association chief executive.
"Where is the value and where is the benefit to the customer? Whatever the IMF is thinking, I think they need to rethink it."
The 'Sunday Times' reported the external review was being spearheaded by the Department of Finance, but a spokesperson for the department could not be reached for comment.
The IMF report released in June said the banks' non-interest income amounted to 0.3pc of average assets last year, "partly reflecting restrictive fee approval processes".
Under Section 149 of the Consumer Credit Act, the Central Bank is tasked with the job of ensuring that the right balance is struck between recovering the costs to banks of providing services and making sure the charges imposed on personal account holders and small businesses are reasonable.
Mr Jewell said the Consumers' Association and other "independent voices" should be consulted as part of the review.
"I think it would be important that other independent voices would have the ability to contribute and put forward the view of the actual customer at the coal face," Mr Jewell said.
"To say, let's be realistic, what are we getting for the money we're currently paying and how significantly is that going to improve and the terms be enhanced by any increase.
"I think the answer to that would be significant and important," he added.
Central Bank director of consumer protection Bernard Sheridan told the Oireachtas Finance Committee in April that it has a robust process in place, including the use of customer profiles, to determine the appropriate level at which to increase charges.
But the Irish Small and Medium Enterprises Association has described current bank charges as astronomical.
"At a time when businesses are doing their best to embrace e-business, we believe the banks are not helping the situation," chief executive Mark Fielding told the same Committee.
"Increases in business online charges range from 42pc to 250pc, whereas those for paper transactions have risen by 33pc to 97pc."