Minister calls out ‘Laggard’ banks over low interest rates for savers

RTE.ie has reported that Simon Harris, the Minister for Further and Higher Education, said people are not benefiting in terms of the interest rate increase on their savings.

In an article by Fergal O’Brien, he reports that the Minister said it is “utterly offensive” for Irish banks to be “complete and utter laggards” in passing on interest rate increases to savers.

Minister Harris said the financial institutions “need a reality check”, adding that it is “not acceptable” that banks in some places “are trying to have it both ways”.

He said there is “a situation where ‘oh we’re sorry, we have to increase your mortgage interest rates because the interest rates increased’, but actually the poor saver and maybe the pensioner or maybe the parent who has been squirreling away small amounts of money week in, week out… finds themselves not benefiting in terms of the interest rate increase on their savings”.

Although banks have started to improve their offering to deposit holders, the higher rates mainly apply to regular saver accounts or term accounts where savers lock their money away for a period of time.

Regular deposit accounts and current accounts are still attracting negligible rates of interest.

The Minister said “it’s utterly offensive for Irish banks to be complete and utter laggards when it comes to passing on the benefits to those who have money on deposit” in relation to interest rate rises.

He said there are people in the country “feeling they are getting fleeced by certain financial institutions”.

Minister Harris said he welcomes the fact that the banking levy will now remain in place and that the Government “will review both the scope and the impact of it in advance of the Budget”.

A bank levy has been in place since the global financial crisis. It is designed to ensure that as banks became profitable the taxpayer is able to ensure benefits from the return to profitability.

The average interest rate on new mortgage arrangements in Ireland breached the four per cent mark last week.