Oireachtas committee backs fees for ATM cards

An Oireachtas committee that has been investigating bank charges is set to recommend that consumers continue paying €25 and €40 a year for debit and credit cards.

The Joint Oireachtas Committee on Finance and the Public Service believes that it would cost the Exchequer too much to drop stamp duty on credit, ATM and laser cards.

The committee's draft interim report says that the duty will remain.

"The stamp duty on credit cards yielded €59 million in 2004, stamp duty on ATM and laser cards yielded €35 million, and the joint committee considers that abolition would be too expensive," it states.

However, it points out that, as a result of provisions in this year's Finance Act, stamp duty will only have to be paid once from 2006. Currently, if someone who has already paid the duty changes their bank or credit card supplier during the year, they have to pay it a second time.

The duty paid is €40 a year for credit cards and €25 for ATM and debit cards. The tax is paid to the State.

The committee began finalising the report yesterday. It is the result of hearings at which most of the State's major financial institutions and a number of other bodies, gave evidence.

It was chiefly concerned with charges to consumers, the level of competition between banks, and their compliance with the law and corporate governance.

The draft states that the industry here is concentrated in the hands of a few powerful institutions, and says there is insufficient competition between them.

It is also recommending that the State continue to regulate bank charges, for the short term, and says that the Irish Financial Services Regulatory Authority should be prepared to name and shame financial institutions that impose "oppressive" fees.

The committee yesterday debated asking the Competition Authority to investigate a case where only one institution, AIB, bid for a lucrative banking services contract with Cork County Council, one of the Republic's wealthier local authorities.

The council tendered for a new bank after AIB, which handled its accounts, told the authority that it intended increasing its charges from €30,000 a year to €217,000 between 2002 and 2007.

The council tendered for a new bank, and three institutions, AIB, Bank of Ireland and Permanent TSB applied.

However, the latter two dropped out of the competition, leaving the council stuck with the high-charging AIB.

Executives from Bank of Ireland and Permanent TSB both explained their institutions' decisions to the committee.

However, the draft report states that they "did not throw much light on this matter".