Consumer body criticises removal of free banking
BANK OF Ireland has been sharply criticised for changing its current account fee structures and making it almost impossible for thousands of its customers to avoid paying bank charges.
The National Consumer Agency described the changes as “a backwards step” that would put the bank’s customers in a “lose-lose situation”.
The agency also encouraged Bank of Ireland customers to consider switching their current accounts to financial institutions that offered better value for money.
Under changes to the Bank of Ireland fee structure, from the middle of November free banking will only be available to customers who leave €3,000 permanently in their current account.
This money will not earn any interest.
Previously customers who had €3,000 going through their accounts over a three-month period and made nine online transactions also avoided charges.
The agency expressed its disappointment at the bank’s decision to change the fee structures for current account holders.
The agency’s director of public awareness and financial education, Karen O’Leary, said the charges created “a lose-lose situation, which will act as a deterrent to smart banking by encouraging people to use more cash and less electronic payment methods like debit cards”.
Ms O’Leary described the move as “a backwards step at a time when we are being encouraged to be less reliant on cash” and said that banks should charge their customers “based on how they use their account rather than their ability to maintain €3,000 in their current account. There are very few consumers who can afford to put €3,000 out of reach nowadays.”
Ms O’Leary said the bank had to be aware that many consumers would be unable to meet these new conditions and she called on it to clearly state what proportion of their customers will lose out on free banking services as a result.
The agency also urged Bank of Ireland’s customers to review their statements, assess the charges they will be subject to, think about how they use their account and consider switching accounts if they can make savings.
There was bad news also for tens of thousands of Bank of Ireland standard variable rate (SVR) mortgage holders, who are going to be hit with a 0.5 per cent rate increase in a move that will add nearly €1,000 to the annual mortgage bill of a customer with a loan of €300,000.
Customers of Bank of Ireland-owned ICS Building Society will also be hit by the rate hike.
The rate increase for new business was announced last month, and last week the bank started writing to existing customers informing them of the rate change.
The bank stood over the changes by saying current accounts were “an expensive account to supply”.
A spokeswoman for Bank of Ireland defended its decision not to issue news releases to the media about the bank charge changes or the mortgage interest rate increase and claimed that improvements to its online operation and the creation of banking apps for smartphones were costly and would have to be paid for by end users.