Bank of Ireland has announced sweeping changes in the fees it imposes on current account holders, saying it would abolish service charges and replace transaction fees for its 675,000 current account holders from December 7th.
Mr Des O'Reilly, sales and marketing general marketing, said a simplified two-tiered payment system would be introduced, at an annual cost to the bank of £5 million. The move was prompted by customer research which found that fees and charges were generating ill will.
He expected other banks to follow suit shortly because of the savings to be made by account holders.
Mr John Collins, general manager of insurance and retail banking, said the changes, which sees 21 service charges being abolished, would probably shape the future direction of banking transactions.
Customers will be able to opt either for a pay-as-you-go 22p per transaction charge, or a flat fee of £9 per quarter for up to 90 transactions and pay the 22p charge per transaction after that.
Bank of Ireland estimates that across a basket of transactions and services, a high user - making 240 transactions a year - would pay £36 annually under the new current account arrangement, compared to £98.62 for AIB, £103.30 for National Irish Bank, £118.72 for Ulster Bank, £102.94 for TSB, and £94.98 for ACC.
For a low user, carrying out 80 transactions a year, the cost would be £17.60, with ACC the next closest at £44.58.
Bank of Ireland said the changes, which have received the approval of the Director of Consumer Affairs, Mr William Fagan, were introduced because customers wanted simplicity rather than "the myriad of charges and the confusion over what does or does not qualify as Free Banking".
To qualify for Free Banking, where customers pay no transaction fees but pay service charges, they must maintain at least £100 in their current accounts.
Mr Des O'Reilly, said research had shown that less than one third of customers were satisfied with existing arrangements.
"We have set out to try and address that, recognising that the current account is the single most important determinant for satisfaction with the bank among a large number of customers," he said.
He added that the bank hoped to recoup its £5 million annual loss through customers opting to increase their business with the bank rather than seeking products from other financial institutions. Further structural price changes are expected to occur next year to benefit business customers and loyalty incentive schemes are to be introduced.
Charges to be abolished include those for standing orders and direct debits, for cheques and Eurocheques and for replacing cards and PINs.
The bank is also introducing a personal contact approach at branch level, follow up "customer care" and a new ATM card incorporating Pass, Laser and Cirrus.
