Banks' lobby president advises on DIRT remedy

Damage caused to the banking industry by the Dail Committee of Public Accounts inquiry into the evasion of DIRT will be reversed only if the banks address the issues by way of best practice, the incoming president of the Irish Bankers' Federation an Fitzpatrick, has warned.

Mr Sean Fitzpatrick also called for a "speedy decision" by the Government on the future structure of regulation, saying the current uncertainty was "most unhelpful".

The committee's inquiry had a fundamental impact on the public's perception of the industry "with some justification", said Mr Fitzpatrick, who is chief executive of Anglo Irish Bank. "It will take time and the commitment of everybody involved in banking in Ireland to re-establish the reputation to which we aspire," he said last night.

On proposals by the Government to take money held in bank accounts which have not been activated for more than five years, Mr Fitzpatrick said this period was "far too short".

"There is evidence already that a period of five years for dormancy, as reported in the media, is causing considerable disquiet among account holders.

"Furthermore, such a short period would lead to a very high level of account reactivation and, as a consequence, a huge amount of unnecessary administration and paperwork for all of the parties concerned."

Mr Fitzpatrick said 15 years was a shortest defined period for the purposes of dormancy in the EU. "It is important to note that money in a bank account, whether dormant or otherwise, always remains the property of its rightful owner and is subject to a valid claim at any time."

He added that the State's banks were "at a loss" to understand the proposed exclusion of credit unions from the Government's initiative. "We believe a dormant account has the same significance irrespective of where in the financial sector it may be."

On proposals to change the formal regulation of the financial sector, Mr Fitzpatrick said the federation favoured the Central Bank retaining its role as regulator. But he added that it should incorporate an "important consumer protection dimension" in the new structure.

The introduction of the euro in cash was the greatest challenge facing the financial sector and the business community, Mr Fitzpatrick added. Implementing a smooth transition to the currency would be crucial to enhance the banks' reputation.

A code of practice on mortgage arrears was also being finalised and this, too, would have an important role, Mr Fitzpatrick said.