THE CENTRAL BANK has ordered some Irish banks to drop certain charges levied on current account holders who exceed their spending or credit limits.

An inspection of over 300 current account options provided by five Irish banks showed a number of fees, although permitted under the terms and conditions of each bank’s offers, were being applied in unfair ways.

The inspection examined three ‘out-of-order’ charges, specifically surcharge interest, referral or overdraft fees and unpaid item fees – arguing that these charges were more likely to be incurred by customers who are already in financial difficulty.

As a result, one bank has been told to stop applying a minimum €2.54 surcharge interest charge, which had been levied even when the interest accrued was less than this amount.

Two other banks were told to stop charging both a referral fee and an unpaid fee in circumstances where an item, such as a direct debit payment of a bill, was unpaid.

One bank – which had charged a referral fee based on whether sufficient funds were available to pay for an item at the time of presentation and not by the close of business, as is the industry norm – was also direct to amend its practices.

The Central Bank said it had asked banks not to levy unpaid item fees on customers where those penalties were greater the value of the unpaid item.

In future, all banks have been asked to include details of unpaid fees in bank statements, after the Central Bank learned that only one of the five banks actually provided such details in the customer statement.

The Central Bank’s director of consumer protection, Bernard Sheridan, said consumers needed “to be aware that they will incur out-of-order charges when they do not have sufficient funds in their account to meet outgoing payments.

“It is important that consumers keep an eye on their bank accounts and take steps to avoid such charges where possible.”