THE BANKING SECTOR has been told that they will not be given powers to set fees without approval.
The Department of Finance yesterday considered the removal of a section of the Consumer Credit Act that would allow freedom in setting the charges.
That was rejected, however, with the Department of Finance saying that the lack of competition in the market would give the existing banks an unfair advantage.
“The lack of competition in the banking sector means that the removal of section 149 would give unfettered price setting power to the incumbent banks. However this conclusion should be revisited when competition in the banking sector has improved.
“The review also recommended that the process used by the Central Bank of Ireland for assessing applications under the Section 149 process should be examined further to take account of Government policy, changing customer behaviour and product developments.”
The decision was welcomed by Mark Fielding of the Irish Small and Medium Enterprise Association.
“Section 149 is an important protection for SMEs against the bailed out Irish banks tendency to increase charges to buttress their profits on the backs of vulnerable SMEs.
“The Act requires approval from the Central Bank Financial Services Regulator for increased prices but even this has not stopped bank charges from spiralling out of control in recent years.”
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