The timing of the Irish Financial Services Regulatory Authority (IFSRA) announcement of its three-year strategic plan is apposite. Yesterday, as the agency was setting out its consumer centred goals, its parent, the Central Bank, was publishing data on Irish interest rates as part of a euro zone-wide comparative series co-ordinated by the European Central Bank.
This monthly exercise - which was instigated in December - serves to remind us once again that we pay a very high price for financial services here. With the exception of mortgages and certain types of personal loans, the interest rates charged by our financial institutions are ahead of the average in the euro zone. When it comes to personal overdrafts we pay more than 3 per cent per annum more than the average. Businesses here also pay over the odds for overdrafts and loans, according to the ECB and Central Bank data.
These discrepancies serve to highlight the challenge now facing IFSRA: to turn fine sounding words into concrete action that will ensure that consumers get a fair deal from the providers of financial services.
At this stage, some nine months into its existence, we have had plenty of rhetoric from IFSRA but only limited action. The running has been made to date by the Competition Authority, which has instigated an investigation into the banking sector, focusing on current accounts and small business banking. The authority is not expected to report back with recommendations until later this year.
Yesterday was another occasion for oratory, with the consumer director of IFSRA promising a range of initiatives in the coming 12 months, including industry-wide codes of conduct, mechanisms for monitoring the level of competition in the industry and a consumer charter.
The chief executive of the agency spoke of the approach that will be taken to regulation. In essence, the agency believes that by enforcing high standards in the boardroom it will foster a culture of integrity, competence and best practice amongst our financial institutions.
While laudable and welcome, it is hard to see how any of the initiatives and principles elucidated yesterday will significantly bring down the cost of financial services here in the short term.
Of course it should be remembered that this is not the purpose of IFSRA, which is fundamentally a regulator, and concerned with the health of the financial system. However the organisation's genesis was in the perception that the Central Bank was overly focused on prudential issues at the expense of consumer rights. And it will be judged primarily by an increasingly sceptical consumer lobby in terms of how it delivers in this sphere.
The best way that IFSRA can protect consumers is to make sure that they are not overcharged for financial services. The proof of that will be when we are paying the same interest rates as other members of the euro zone for all our financial services.