Consumers can expect more information regarding interest rates, fees and charges imposed by financial institutions following the introduction of a voluntary code of practice. The informational Code of Practice on Transparency in Credit Charges for Personal Customers was developed by industry bodies and consumer regulators in response to revelations in 1998 that National Irish Bank had systematically overcharged its customers.
The excessive amounts paid by customers included fees, charges and rates of interest imposed on their accounts, said the Minister of State for Consumer Affairs, Mr Tom Kitt, when the code was launched two weeks ago.
The Minister, the Director of Consumer Affairs, Ms Carmel Foley, and several industry bodies worked together on the initiative which was designed to restore consumer confidence in the financial industry following the scandal.
Under the code, participating financial institutions must provide customers with information regarding their fees and charges. Depending on the product, this information may be provided verbally or in writing.
The code does not compel institutions to display their charges in branches. "Institutions must display notices advising customers how to access information on charges for standard products and services," according to the code.
This information will include, in the case of current accounts, how such charges may be reduced. Information on charges for non-standard services will be given as a matter of course when these services are requested.
Significantly, credit institutions must provide internal procedures for dealing with complaints of interest and charges. When a case of overcharging is established, credit institutions will repay the overcharged amount in current value terms. Depending on the individual case, an ex-gratia payment to cover any reasonable out-of-pocket expenses may be made.
Since 1995's Consumer Credit Act, institutions must notify the Director of Consumer Affairs of their charges and any adjustments to them. Charging above these stated amounts is illegal, said Ms Foley.
The code is subject to annual review, and if the Director of Consumer Affairs receives complaints on the code, these will be taken into account when the director talks to the institutions, said a spokesman. Ms Foley will publicise violations of the code.
All institutions must fully apply the terms of the Code by October 2nd. All members of the Irish Bankers Federation, the Irish Mortgage and Savings Association and the Irish Finance Houses Association have signed up to the code.
Despite consumer disquiet concerning overcharging by the banks, the industry maintains that there was no widespread overcharging scandal.
Mr Felix O'Regan of the Irish Bankers' Federation says that at the end of last year, 97 per cent of the 1,065 complaints against various institutions received by the Garda Bureau of Fraud Investigation following the NIB scandal were found not to involve any offence. "They were found to reflect the complainants own belief that they were being overcharged for credit," he said.
The situation is very different in Britain. Two weeks ago, a government sponsored report made a stinging attack on British banks saying high street bank charges amounted to between £40 and £400 for most households. The report says the excessive amounts led to overcharging of customers by between £3£5 billion sterling (€4.8 billion).
