28/04/2006

NI bank customers are paying more

A report by the Competition Commission (CC) has revealed that Northern Ireland bank customers are paying higher charges for current accounts than those in the mainland.

The CC report claims that this is due to a lack of competition between the four main banks in the province - Bank of Ireland, Ulster Bank, First Trust and Northern Bank.

The 'super-complaint' was lodged with the Office of Fair Trading by the Consumer Council and Which? Magazine almost 18 months ago and it highlighted the fact that bank customers are paying higher charges and getting lower rates of interest than anywhere else in the UK.

Inquiry Group chairman, Christopher Clarke said: “From the evidence we’ve seen so far, it appears that despite changes by some, but not all, of the banks in their products and prices, competition in the provision of personal current accounts (PCAs) in Northern Ireland is not fully effective. As a result, some PCA customers may be paying more in charges and in a wider range of circumstances, and may be receiving lower interest when their accounts are in credit, than might be expected in a competitive market.”

Mr Clarke continued that many consumers do not move their account to other banks as they believe it will be difficult and make little or no difference.

“We’ve found that a relatively small number of customers switch their PCAs, largely because they believe it is difficult, time-consuming, risky and of little benefit. Loyalty to their current bank is high and they are concerned that their longer-term banking relationship might suffer.

They also see little difference between the products offered by the individual banks and given the complexity and lack of transparency of their banks’ products and charges, customers find it difficult to make comparisons between them. It also appears that this low level of switching may allow the banks to charge higher prices than would otherwise be the case.”

Steve Costello, Chairman of the Consumer Council said: “The Consumer Council initiated this process with a super-complaint 17 months ago in the belief that the Big Four Banks were anti-consumer and anti-competitive. The banks have consistently failed to convince us and their customers otherwise.”

He continued: “For too long, customers here have been trapped by fear and lack of choice in a rip-off culture of similar pricing, low interest and high charges. Low levels of switching and the Big Four's more extensive branch network may be allowing them to charge higher prices than would otherwise be the case.

“Consumers deserve fair, competitive banking that works for them, not against them. The banks must change this shameful treatment of customers now before they are forced to change.”

Mr Costello added that although there has been some change in the market, more is needed and the Consumer Council is calling on bank customers who are not getting a fair deal to challenge their banks and if they are not satisfied, to shop around and switch banks.

Since the submission of the super-complaint, around 25,000 people have already switched, saving each of them up to £80 every year as a result.

Steve Costello concluded by saying that the Consumer Council continues to work for a fair deal and is preparing to meet the Competition Commission at its next formal hearing in June.

(EF)

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