Euro charges

On account statements from AIB Bank, you will find a striking sentence, which should manifest how progressive the institute is. It reads: "On January 1st, 1999, the new European single currency - the euro - officially came into being. To reflect this new development, euro information has now been included to help you get used to thinking in `euro terms'."

Consequently, clients get on their bank account statements the balance in both pounds and euros. In order to support this euro-friendly booking system on my last trip to Ireland, I brought with me a bank cheque issued in euros and to be credited to my AIB account. First I received the correct equivalent in pounds at AIB, but then I got punished with a (foreign exchange) commission of 3 per cent. This strikes me as amazing and something which would not have happened had the cheque been denominated in pounds. Is this the new kind of thinking in euro terms? Shall I now call the behaviour of the bank(s) progressive or greedy?

Mr M.H., e-mail

Oh dear. Another dissatisfied customer of the banks' new regime since the abolition of foreign exchange commissions within the euro zone. I have to say, though, that you are the first I have come across to have embraced the euro concept so thoroughly.

Unfortunately, as you have now discovered, you are way ahead of the Irish banking system, even if the euro is now the Republic's official currency and the pound only a denomination of that currency. One might argue that the reason for the bank's reluctance to treat the euro as our own is a desire to maximise profit on forex transactions for as long as possible - until euro notes and coins are introduced and the pound is phased out - although the banks would certainly not accept such a position.

Quite simply, what the bank did was to charge you an administration fee to cover the cost of processing the cheque, clearing it back through the banking system to the bank in Europe upon which it was drawn and lodging it to your account. You are quite right when you say this would not have happened with a cheque drawn in pounds, if that were possible.

The 3 per cent charge was not a foreign commission charge - now illegal within the euro zone currencies and denominations - but an administration charge. As it happens, the bank contests the 3 per cent you refer to. It says the charge would have been either 3.5 per cent up to a maximum of £15 on transactions involving less than £500 (€635), or 2.5 per cent with a minimum of £15 on transactions involving greater sums.

The Irish Bankers' Federation tells me there is an industry-wide code of practice which states that incoming and outgoing payments from euros to pounds and vice versa in most cases - including cheques - will be carried out free of conversion charges. However, other charges can and will occur, it states, and these are sanctioned by the Office of Consumer Affairs.

One of these covers euro denominated cheques drawn on institutions elsewhere in the euro zone, or indeed outside it. The code apparently says that these will be treated like other foreign currency cheques - albeit with a foreign commission element within the euro zone.

As it happens, you appear to be based in Switzerland and may therefore have already been charged commission to draw down the cheque in euros from your local bank in the first place. If so, it appears you have been doubly penalised for trying to be a good European. Now, had your Irish account been a euro denominated account - of which there are only a few - the situation might have been different. . . but I wouldn't bet on it.

As for the bank statements, these are part of a nationwide exercise to educate customers on the euro before the notes and coins start appearing. The aim is, understandably, to reduce the confusion which is certain to occur at that time.

Stockbrokers

It has been my experience and that of others I know that stockbrokers are really not interested in dealing with clients whose investment is less that £2,000 (€2,540) or £3,000. How, therefore, will the poor sod with, say, only £500 to invest in Telecom Eireann shares be able to dispose of his or her shares after a few months in order to take a modest profit? Where will he or she find a broker to take his order for sale (and without sneering)?

Mr D.McA., Limerick

For every broker who protests that they value all their customers equally, I hear scores of tales, like yours, of customers who feel they have been treated with disdain, if at all. Whatever, the brokers might think, it is clear something is not right. Perception is important and, while the financial services sector in general is often characterised as aloof and remote from its customers, the problem appears to be particularly acute with stockbrokers.

However, there are two points that I would make.

First, with the recent wave of demutualisations - Irish Permanent, Norwich Union and First National Building Society (now First Active) - and privatisations such as Telecom Eireann, stockbrokers are becoming increasingly used to dealing with small shareholders, many of whom are not particularly well acquainted with the machinations of the stock market.

Indeed, with further privatisations of State companies on the way, the number of small shareholders is likely to increase and it is in the interests of brokers in a very small market such as the Irish Stock Exchange to maximise the number of shareholders trading on it and providing them with business. This is particularly so as larger investors look to the panEuropean market both for opportunities and intermediaries, such as brokers.

Second, not all brokers are the same. In the same way that it can be more satisfying to deal with the corner shop rather than the supermarket in terms of customer service, so too it can be with brokers. Sometimes a smaller broker will offer a more personal service and the intense competition between brokers means that - unlike your local corner shop - you should not have to pay substantially more for the service. In short, it pays to shop around, and not only for price.

Of course, most of the brokers are offering special deals on the sale of Telecom shares, as they have done with previous mass market flotations. These are specifically geared to the smaller shareholder and offer reduced commission costs. However, the level of service is also reduced and the customer has no control over what price the shares are sold at.

In short, stockbrokers will certainly deal with the smaller investor and if the one you first contact sounds like they're sneering, take your business elsewhere.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.