EU study finds Irish current accounts less transparent

CURRENT ACCOUNTS in Ireland are less transparent than the European average, with more complex pricing structures, an independent study into European bank account fees has found.

The study, which was conducted in 2007 among 224 European financial institutions – including Bank of Ireland, Ulster Bank, Allied Irish Bank and Irish Life Permanent – found that Irish customers must spend more time than the average European analysing and comparing charges on current accounts if they wanted to understand the pricing structure.

When compiling the report, the authors needed further assistance from 66 per cent of the banks to determine the real costs of an account. Of the four Irish banks that took part in the survey, three had to be contacted again.

The report, which was published yesterday by the European Commission, described the terms of bank accounts across Europe as being “very opaque, making it almost impossible for consumers to know how much they are paying and to compare different offers”.

With regards to the annual cost of current accounts, Irish banks were found to impose high account charges but very low credit transfer fees. A higher degree of price competition between Irish institutions compared to the EU average was also evident.

The average Irish customer is paying €82 per annum for their current account – less than the EU average of €150. That places Ireland 16th most expensive of the EU’s 27 states but it remains more expensive than the UK, the Nordic and the Benelux states.

Basic users fare better, with the cost of a basic Irish current account far below the EU average of €110, at less than €40.

The report also pinpointed a greater level of indebtedness among consumers in Ireland, as evidenced by the higher proportion of payments using credit cards compared to the EU average. On the other hand, they engaged in a considerably lower number than average of payment-related transactions in 2007, while credit transfers, direct debits and point of sale payments with debit cards were also shown to be less commonly used in Ireland than in Europe.

Problems consumers face when trying to understand financial products were also highlighted in the report. It criticised the complex language, featuring difficult financial or legal jargon, used by institutions to sell their products.