Ann Fitzgerald and the National Consumer Agency fail to provide mortgage comparison facility as demanded by the European Commission

It was just last week when Eurostat, the EU’s statistical agency, released figures which showed on a typical basket of consumer items, inIreland we are paying 18% more than the EU average. By itself that doesn’t mean a great deal, but when you consider that by reference to per capita GNP we are just 103% of the EU average, you might conclude that in Ireland our prices are just out of line and that we, as consumers, are being scalped.

And anyone that uses products and services across the EU can’t fail to notice that Ireland is very expensive, and my own view on my own basket, is that we are typically 30-60% more expensive than our nearest neighbours, the UK. So I am probably prejudiced towards what appears to be a lack of competition in this country.

But one area of concern for competition that has grabbed our senior politicians is competition in the banking sector. Remember that we are pouring €13.3bn into AIB, a so-called “pillar bank” before the end of this month. There might be a couple of billion saved from that bill if the present subordinated bond buybacks are successful, but we will still be putting in more than €10bn. And why are we keeping AIB? “For competition” is the stock response. Never mind the fact that we can get by with one Post Office in most areas, never mind the fact that for 70 years after the foundation of the State, the presence of the duopoly of Bank of Ireland and AIB (in several guises) didn’t deliver any noticeable competition and it wasn’t until the foreign banks entered our market in the 1990s that competition for deposits and loans really took off and of course never mind the fact that we still have four foreign banks active in the Irish market as well as a credit union sector as well as the Post Office. But competition is the reason given for preserving AIB, so it must be an important principle.

Which makes the subject of this entry quite confusing. It was 15th July 2010, almost a year ago, that the European Commission issued its decision on the restructuring of Ireland’s biggest bank, Bank of Ireland. Actually what it publicly issued back then was a press statement, the decision itself remained private to affected parties for seven months and was only published on 3rd February, 2011. And competition in the banking sector was at the fore of the agreement to restructure Bank of Ireland which is in receipt of State-aid through the State-guarantee and other funding. And a specific area of concern was that Irish banks would start scalping their mortgage customers, particularly those on Standard Variable Rates (SVR), and start increasing interest rates in an uncompetitive manner. So the European Commission wanted to ensure that Irish mortgage consumers could switch mortgages if one bank was becoming uncompetitive. And to this end, the Commission provided its approval of the Bank of Ireland restructuring plan, in part on the basis that “the NCA will redevelop the banking cost comparisons on its “itsyourmoney.ie” website to provide more and better information on available banking products. A mortgage rate comparison will be added. The site will be more interactive and will allow users to link to switching tips and to providers’ websites for follow-up” The implementation date was Q4, 2010 that is six months after the decision was issued last 15th July 2010. The NCA is the National Consumer Agency, a state company established under the Department of Enterprise. The chief executive since 2007 has been Ann Fitzgerald (pictured here – EDIT: please contact the blog if the picture is taken down)

And yet here we are in Q3, 2011 and as of this morning, still no mortgage comparison functionality on the “itsyourmoney.ie” website. When contacted about the slippage in February the agency said that there had been a procurement process which complied with EU public procurement guidelines which had culminated in the identification of a preferred vendor in December 2010. Development work on the new comparison tools was underway, with delivery scheduled to take place on a phased basis commencing in Q2 2011. When contacted today the agency said that a number of other modules eg student travel loans were to be launched by end Q3, 2011 and the mortgage comparison tool was to be launched the other modules were completed. Elsewhere it indicates that may be a matter of weeks. Regardless, we still don’t have a much needed mortgage comparison facility over six months after the European Commission said we should. And meantime we have had quite a few SVR interest rate increases and on Thursday this week, the ECB is likely to raise interest rates by 0.25-0.5%, the second increase this year.

It was May 2008 when then-Taoiseach Brian Cowen referred to the NCA as “fuckers” in the Dail when he told his Tanaiste Mary Coughlan “bring in those people and get a handle on it. You know all those fuckers” It was two months ago when Minister for Health James Reilly removed the entire board of the (Health Service Executive) HSE. Is it time for Minister for Jobs, Enterprise and Innovation, Richard Bruton to do the same with the board of the NCA (listed here)? Because (1) our consumer costs inIreland appear out of line with our incomes and withEurope and (2) it doesn’t seem able to deliver on requirements from the European Commission.

UPDATE: 5th July, 2011. “God is very quick these days”  said Blackadder famously after “Now, I’m not a religious man, as you know, but henceforth I shall nightly pray to the God that killed Cain and squashed Samson that He comes out of retirement and gets back into practice on the pair of you” and then receiving a telephone call asking for two volunteers for a mission. Well it seems that Richard Bruton has decided to get rid of the board of the NCA today. In a press release he states that the NCA will be merged with the Competition Authority and the removal of the NCA board will save €170,000 per annum. That’s all very well and as noted here last week we have a plethora of consumer organisations that seem to be making little impact on prices, so the hope is that this announcement is not focussing on saving administration costs but that it results in real progress in re-basing prices in our economy.

Advertisement