29 September 2005 Edition
All-Ireland bank regulation needed
Small businesses lost €255 million between January 2001 and 2004 because Irish banks failed to pass on interest cuts to their business customers. This was one of the startling findings of a Competition Authority report published last week that called for substantial reform of the 26-County financial services sector.
The Competition Authority found that the Irish banking sector is uncompetitive and its 1.9 million customers are being locked into unattractive terms and conditions controlling their accounts.
The Authority called on the Finance Minister to intervene to tackle a banking system that competes only for first-time customers leaving long-term customers trapped and loaded with expensive restrictions and charges on their accounts. AIB and BoI have over 70% of the retail market between them.
These bank accounts are vital for Irish workers, whose wages are paid directly into their current accounts and out of which they pay mortgages, utility bills and often credit cards. They are forced to take on these expensive accounts just to be able to do the basic everyday things.
The Competition Authority found that most bank customers who initially open current accounts end up getting credit cards, bank loans and mortgages from the same banks and that few customers ever switch to rival banks.
Earlier this year the Office of Fair Trading agreed to investigate banks charges in the Six Counties. Given that the same banks are involved on both sides of the border, the time has clearly come for an all-Ireland banking market with effective empowered regulation to ensure that customers across the island get a fair deal.