The Central Bank has directed a number of banks to cease unfair practices relating to ‘out-of-order’ charges on current accounts.

During an examination of 300 current accounts across five banks, the Central Bank did not find evidence of overcharging, but it identified a number of concerns with the way in which certain out-of-order charges were applied.

Out-of-order charges arise when a customer uses their account outside of approval limits, and include unpaid item fees, and surcharge interest on balances that exceed overdraft limits. They are more likely to arise for customers in financial difficulty, who struggle to keep a positive balance in their current accounts.

On foot of its inspection, the Central Bank has prohibited the application of two types of out-of-order charges – referral fees and unpaid item fees - jointly, on the same item. It has also directed one bank to stop applying a minimum amount of surcharge interest, where the amount of interest accrued on the account is less than that minimum level.

The Central Bank has also encouraged all banks to enhance the ways in which they help customers to avoid such charges.

"Consumers need to be aware that they will incur out-of-order charges when they do not have sufficient funds in their account to meet outgoing payments," said Bernard Sheridan, director of consumer protection at the Central Bank.