Are banks breaking rules by charging account fees?

“AIB will charge me for not having enough money in my account, apparently I can’t even afford to be broke.”

Regulation is a tricky area, it is a branch of law more than of finance and like law it is open to interpretation, precedent and individual cases.

So when I see Anne Fitzgerald of the NCA say that AIB is ‘breaking the rule that required it to act in the best interests of its customers’. I am concerned because it doesn’t present the context of the rule, rather it just makes a statement.

The actual rule being mentioned is Section 2.1 & 2.2 of the 2012 Consumer Protection Code. Chapter 2 in general covers consumer credit, payment services, and electronic money. The actual text of this section (2.1/2.2) is as follows:

“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it that it (2.1)acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market and (2.2) [that it] acts with due skill, care and diligence in the best interests of its customers”.

What it doesn’t say is that ‘it acts in a manner in which costs are not recouped’ or that customers are foremost in price setting. And this is where anger (which I understand and agree with) meets law then comes out the other side as a mutated interpretation.

The premise of acting in the best interest of customers doesn’t just mean those affected, it means all customers, so when banks are serving multiple constituencies you can’t err on the side of only those that might be affected. This has already been seen where banks increased variable rates in order to increase margin because they couldn’t get it from tracker holders.

It is not dissimilar now, 40% of AIB account holders won’t be affected (in this instance they are like the tracker holders), and the rest will pay for the banks cost of operating the payments system, and that cost does exist, blogged on it only yesterday.

The other forgotten caveat is that they act with the best interests for ‘integrity of the market‘, the banks point on this will be that the payments system has to be maintained and that is a greater good for all constituencies that this is a viable and functioning piece of infrastructure than free banking is for some.

The final issue is that ‘best interest’ doesn’t mean ‘cheapest pricing’ and it definitely doesn’t mean ‘free’, they are quite really different things.

I accept that sometimes banks are places that help you with problems you would not have had without them, but ‘free’ was never prescribed in Consumer Protection policy in word or spirit, this is a blatant error by the National Consumer Agency and is frankly disappointing to see because it doesn’t imply the high standards that office normally holds, if you want to beat a bank with Regulatory Code then at least get it right, use the right tool for the right job.


  1. Mr. DJ

    I can’t believe you are sticking up for the banks, you are such a vested interest fucking liar. The banks ARE breaking the rules – charging account fee’s is NOT treating customers ‘fairly’, it’s shafting them because the banks made all of the mistakes. Do you see that side of it? No, instead you are too busy sticking up for those poxes that have this country in the state it is in. Deeter, you are an idiot.

  2. @DJ I wouldn’t call pointing out a misinterpretation of the law ‘vested interest’ or ‘defending’ anybody in a biased manner, the law is the law and the whole idea of treating the customer fairly is not about pricing.

    It may be hard to unravel the two, but they really are separate things. Take banking out of it, instead imagine we were running a shop that used to give out cups of water for free. There is a cost to this (the cups, the water – even tap water has an implied cost via commercial rates which cover it), if turnover was not sufficient to continue this practice we might start to charge for the cups – would that be ‘unfair’? Would it be denying people access to life giving water? Hardly…

  3. Joey

    Hi Karl,

    You seem to have finally waken up!!Of course there are plenty of strategic defaulters out there, i can name a few ones, Sean Fitzpartick, Phil Hogan ( holiday home fees defaulter), Sean Quinn,.

    Plus i have hear that a certain number of banks do not intend to pay the loans they took from the irish people is that true as well? Quid Pro Quo!

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