Banks are abusing consumers through excessive interest rates in order to restore their depleted balance sheets, according to the Financial Regulator.
The Financial Regulator has said in a recent report that Irish bank customers are being “mercilessly fleeced” by our banks. It appears that those who do not possess a tracker mortgage are baring the brunt of unreasonable charges, and have received the treatment of “second-class citizens.”
While other countries that were hit by the economic downturn have experienced a radical and welcome lowering of interest rates, Irish consumers have not have the benefit of the European Central Bank rates and paradoxically are paying increased charges since the recession.
The Consumer Consultative Panel report has called for increased consumer protection, especially in this harsh economic climate.
“Consumers should not be disproportionately punished with higher fees and interest charges in order for the banks to rebuild their balances, especially while the Government is contributing substantial sums to them.”
Consumers must be defended against banks working in a cartel to set charges, says the report.
The panel is to be replaced by new group that is tasked with advising the Central Bank on issues in relation to consumers.
An overhaul in the financial management of the country has been called for by the report, involving the replacement of the top officials in order to reform the deficient system.
The report examines the financial services sector and its developments in the past year. It positively remarked on many of the changes that came into play over the past year such as the appointment of a new regulator from overseas and the in-depth investigations concerning the financial crisis.
The panel says it still has reservations about how the consumer is regarded in this new system however. It is clear after our national crisis that the consumer must have greater rights and protection. The banking market has become less competitive meaning the consumer is hugely vulnerable to excessive and dubious charges. Banks must curb risk-taking in future investments and firm regulation should be established to ensure this, says the report.
Standard variable rate mortgage holders have been shocked with three rate hikes already this year by all the leading banks. The Financial Regulator’s consumer panel believe that householders who do not have a tracker mortgage are being singled out.
The panel has expressed concern that consumers are being overlooked and are now paying for the Irish financial services sector’s recent mistakes.
