Consumer watchdog’s s silence on rates speaks volumes

One voice notable by its absence in the debate on variable rate mortgages is the Competition Authority, or, as it now known, the Competition and Consumer Protection Commission (CCPC).

The clue to its function is in the new name, but lest you be in any doubt, the first item on its remit is “investigating and challenging practices that are damaging to consumers and/or the wider economy”.

If ever there was a consumer being damaged, you would imagine it was a variable rate mortgage holder who is being charged a 3 or 4 per cent premium over ECB rates for their mortgage in order to allow their bank recoup some of the losses on its tracker mortgage book.

You would expect an organisation dedicated to “bringing anti-competitive behaviour and practices that are harmful to consumers to an end, where necessary via court actions” would be champing at the bit to get involved. However, the CCPC seems content to remain on the sidelines. Even more surprising is the reluctance of a Government under pressure to kick the whole variable mortgage mess off to the CCPC for an “investigation”. It’s a move straight out of the Irish political play book.

The reason, one suspects, is that the whole notion of banking competition went out the window when the Government stepped in to bail out the domestic banks. All of them are now operating under restructuring plans agreed with the European Commission which in effect give the various banks a pass on anti-competitive behaviour.

The axiom of the lesser of two evils seems to be at play. The banks are not being subjected to the rigours of competition law in order to speed their return to profitability and exit from state ownership. But as the Government is finding out, it is a hard message to sell to voters, particularly those on variable rates.