CONSUMERS and businesses have notched up a rare victory after banks were told they can no longer hike fees whenever it suits them.
And in another blow for the banking sector, Finance Minister Michael Noonan met AIB chairman David Hodgkinson and other AIB officials and ruled out a return to bonuses.
A bonus culture has been identified as one of the reasons lending got out of control during the boom, forcing a collapse of the economy.
But bonuses have been banned, and pay has been capped, at all of the rescued banks since 2009.
AIB was pressing for bonuses to be reintroduced while also being among several banks wanting more freedom to hike fees and charges without seeking regulatory approval.
But the Department of Finance yesterday published a review saying this was not the right time to give banks freedom to set their own fees.
The introduction of fees and charges here, and gradual changes to the fee regime last year, means it now costs a family with two current accounts €230 a year for day-to-day banking.
This is on top of the €64bn bailout cost to the taxpayer – a cost that has seen taxes rise.
The cost of bailing out the banks is one of the main reasons half of households have less than €35,000 to live on after paying income tax, PRSI and universal social charge.
The Department of Finance said the law will not be changed to give banks free rein to increase consumer charges – dashing the hopes of AIB, Bank of Ireland and the Irish Banking Federation.
Under the Consumer Credit Act, banks must get approval from regulators in the Central Bank if they want to impose higher fees and charges on consumers for banking services. The rules do not cover interest rates. Department of Finance officials decided now would not be a good time to allow banks set their own fees.
But officials found that banks were able to increase costs to consumers without fear of losing them because of very low numbers switching banks.
And it said banks may be better able to develop innovative products if they are free to set their own fees.
Head of the Consumers' Association Dermott Jewell said the move was a rare victory for what he called "the little guy", adding that "for once the banks lost out".
Representative group for small firms ISME welcomed the decision. It had claimed repealing the section would lead to crippling bank charges.
Meanwhile, Mr Noonan told AIB's David Hodginkson he was ruling out a return of bonuses. AIB had held "exploratory talks" during which it was argued that the ban on bonuses is making it difficult to recruit talented managers.
Ahead of the State's expected sale of a stake in the bank, AIB argued that it is particularly crucial that it can recruit experienced and talented managers.
The bailout of AIB has cost taxpayers €21bn. Mr Noonan is believed to have told Mr Hodgkinson that the Government is opposed to the bank's proposals at the present time.
"He said the bank must now focus on reaching a stage where it is operating to a satisfactory level," a spokesman for the minister said last night.
A spokeswoman for AIB said the bank had no comment to make on the meeting or on the issue of bonuses.