Irish consumers are being “mercilessly fleeced” through paying higher interest rates in order to rebuild the balance sheets of the banks, according to the Financial Regulator’s consumer panel.
Householders who do not have tracker mortgages are being treated as "second-class citizens", forced to pick up a disproportionate share of bank rescue costs, says a report by the Government-appointed watchdog.
It says the "unacceptable" pace of investigation into how the financial system in Ireland came close to collapse "leaves a lot to be desired".
It contrasts this with the US and Iceland, which have moved faster to examine what went wrong, and says in Ireland the commission to investigate the banking crisis, while welcome, should have been established sooner.
"Furthermore, there has been very little outcome from ongoing investigations into dealings at some of our major institutions by the Garda, Office of Director of Corporate Enforcement or the Financial Regulator."
The Consumer Consultative Panel report accepts the need for short-term measures to restore financial stability but says consumers should not have to pay in the long term and "more robust consumer protection is required now more than ever".
"Consumers should not be disproportionately punished with higher fees and interest charges in order for the banks to rebuild their balances, especially while the Government is contributing substantial sums to them."
While consumers in other countries are enjoying historically low interest rates set by the European Central Bank, the report points out that many Irish consumers are now paying higher rates than before the crisis hit and are not benefiting from the ECB stimulus.
It says vulnerable consumers must be protected from the possibility of banks working together to set charges.
The panel, which is chaired by lawyer Raymond O'Rourke, is facing abolition under legislation currently before the Oireachtas, although a new group is to be set up to advise the Central Bank on consumer issues.
The other panel members involved in preparing the report were accountant John Maher, former senator Prof Noel Mulcahy, finance journalist Kathleen Barrington and chairman of the Centre for Financial Services Innovation Sean O'Sullivan.
The report calls for the replacement of those who led the country into the present crisis in order to change the culture of the financial services sector. "It is only with new, independent thinking that we can be sure that the same mistakes are not repeated to the detriment of the Irish people."
There is a welcome for the extension of the deposit guarantee scheme to December, but concern is expressed about what will happen afterwards. The report accuses the regulator of passivity on the issue and of failing to properly understand its role in protecting the consumer.
In a report published last year the panel was severely critical of the regulator's performance but now it says the main recommendations it made then have been taken on board.
The latest report looks at developments within the financial services sector in the past year. It welcomes many of the changes made over the year, including the appointment of a regulator from overseas and the setting up of investigations into the financial crisis.
However, the panel says it is still concerned about where the consumer fits into the new framework. With less competition in the banking market, the consumer could be subjected to a plethora of additional charges of "dubious legality".
It says remuneration policies in the banks must not allow or encourage excessive risk-taking in the future. If financial institutions are to offer staff any bonuses, these should take the form of shares that cannot be sold for at least five years.
