Ulster banks accused of rip-off
Rupert Jones Tuesday November 16, 2004 The Guardian
Consumers are being ripped off by Northern Ireland's four biggest banks, a leading watchdog said yesterday.
Which?, formerly known as the Consumers' Association, has submitted a "super-complaint" to the Office of Fair Trading after finding customers were charged 21 times more than in the rest of the UK.
Which? said the four - Ulster Bank, owned by the Royal Bank of Scotland, Northern Bank, which owner National Australia Bank is trying to sell, Bank of Ireland and First Trust - overcharge customers for virtually every service.
The watchdog added that there was a lack of any real competition in Northern Ireland's retail banking market and that the similarities in charging "suggest, at the very least, tacit collusion".
An estimated four out of five people with current accounts in Northern Ireland are customers of these four banks. A higher than average proportion of the population does not have an account and Which? said it was difficult to believe this was not related to the excessively high charges levied on accounts.
Its research found that a customer of one of the four who has a £500 authorised overdraft for two weeks per month would pay up to £236 a year in charges, compared with £11 a year for somebody with a UK "best buy" account.
And the banks pay most of their current account holders a "paltry" 0.1% interest or nothing at all.
The organisation levelled some of its criticisms directly at RBS and NAB, both of which have sizeable branch networks in mainland Britain. It said they "appear to have decided to carve Northern Ireland away from competition in the rest of the country and simply charge what they want".
This is the third "super-complaint" submitted by Which? following its requests for investigations into the care homes sector and private dentistry market, both of which the OFT has examined.
The OFT has 90 days in which to respond to the latest Which? request. It has the power to launch an inquiry, take enforcement action or refer the complaint to the Competition Commission.
In a statement, Ulster Bank said the financial services sector in the province was "highly competitive" and added that the vast majority of its customers paid no transaction or maintenance fees because their accounts remained in credit.
NAB said it was not making any comment at the moment but would cooperate with any OFT inquiry.
· HBOS is believed to have pulled back from submitting a bid for the two Irish banks put up for sale by National Australia Bank.The sale of Dublin-based National Irish Bank and Belfast-based Northern is part of a major restructuring of NAB's European operations, which also include Yorkshire and Clydesdale banks.
It is thought the price was considered too high by HBOS which, under its Bank of Scotland brand, has 20% of the Irish business banking market. It also sells mortgages and has plans to launch credit cards and savings accounts.