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Banks plan a raft of fee increases for customers

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Under pressure: The latest fees hike comes in the middle of a pandemic which has impacted hugely on consumers’ finances. Stock picture

Under pressure: The latest fees hike comes in the middle of a pandemic which has impacted hugely on consumers’ finances. Stock picture

Under pressure: The latest fees hike comes in the middle of a pandemic which has impacted hugely on consumers’ finances. Stock picture

People are facing higher charges as the Central Bank is considering a dozen applications from banks to increase the fees they impose on customers.

Already this year banks have been granted permission to increase a string of customer charges.

Last week Bank of Ireland announced that from November it is replacing some 26 fees that can be imposed on customers with a flat monthly fee of €6 for all.

Some four out of 10 of its personal current account customers are set to lose out.

AIB is planning to plough ahead with controversial moves to introduce transaction fees in the autumn for customers who have been able to avoid them up to now.

The largely State-owned bank deferred introducing the changes during the lockdown after it came in for heavy criticism.

Now it has emerged that more charge hikes are planned by the banks.

They are trying to make up for the loss of income from lending due to weak consumer demand and low interest rates by hiking fees and charges.

A financial expert said it was shocking that banks were hitting customers with higher charges during a national emergency that has seen the income of huge numbers of households negatively affected.

Asked if more banks were planning rises in charges, the Central Bank revealed it was reviewing 12 applications to raise charges.

Under the Consumer Credit Act 1995, credit institutions must seek permission from the Central Bank if they want to introduce any new customer charges, or increase the level of any previously notified charges.

The Central Bank approves the maximum permitted level of the charge.

Regulators said that in the year to July they have approved six notifications to raise fees and charges, and two exemption requests under the act.

There are currently nine applications to hike fees and three exemption requests under consideration. The names of the banks and the details for the charge rises were not revealed, but the number of applications indicates it most likely means all banks are applying to the Central Bank to again raise fees.

Regulators would only say the applications relate to different forms of charge increases, and not just current account charges.

The Central Bank said: "Where a regulated entity intends to introduce new charges or increase any existing charges, under provision 6.18 of the Consumer Protection Code, it must give notice to affected consumers of the introduction of any new charges or of increases in charges, specifying the old and new charge, at least 30 days prior to the charge taking effect."

Daragh Cassidy, of price comparison site Bonkers.ie, said "the number of notifications for fee increases seems shocking".

He said banking charges in Ireland are already incredibly high compared with the rest of the European Union.

Mortgage rates are around double the Eurozone average, SME interest rates average close to 6pc compared with 2.5pc in the EU, while a huge number of current account fees and charges have been brought in over the past few years for personal customers.

"So given all this, and given that we're in the middle of a pandemic that has impacted hugely on consumers' finances, you'd have thought that the banks would have paused introducing any new fees that would negatively impact on consumers," Mr Cassidy said.

But he added that the days of Irish banks increasing fees and overcharging consumers might be numbered.

This was due to the fact that Avant Money, which is owned by Spanish banking giant Bankinter, is soon to enter the mortgage market with rates of under 2pc, and mobile bank Revolut was going from strength to strength.

Irish Independent


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