15 July 2015
BANKING SYSTEM STILL BROKEN CLAIM RETAILERS
POOR SERVICE, HIGHER CHARGES AND CAPTIVE TO THEIR BANK – SURVEY REVEALS BROKEN BANKING SYSTEM FOR RETAILERS
More competition in banking and financial services is a priority for retailers says RGDATA
A survey of RGDATA’s 4,000 independent retailers has highlighted ongoing and persistent problems that the sector is facing with the main banks in Ireland. The survey, which was conducted during June and July sought retailers’ feedback on their relations with their banks across a range of headings.
The survey published by RGDATA today (16 July 2015) confirms that there are few competitive choices available for retailers, who are often stuck with their existing banks because of challenges in accessing credit from other institutions. RGDATA Director General Tara Buckley said that the survey demonstrated that for many retailers, the banking sector is still effectively closed for business and not offering competitive choice or proper service levels to a core sector of the economy.
The key highlights from the survey were;
- 56% of retailers are customers of Bank of Ireland with 39% banking with AIB – less than 10% bank with Ulster Bank
- 91% of retailers use online banking, but most also visit a bank branch at least twice a week
- 60% of retailers have a dedicated contact person in their branch
- Only 30% of retailers have been offered a new service or product by their bank in the last year
- Banks charge retailers between .45c and €3 per €100 lodged in cash and the Banks are not prepared to negotiate better rates
- 34% of retailers say that the increased bank charges on lodgements has negatively impacted on their investment in their business
- 73% of retailers say they would like to move banks to avoid increased charges, but 60% are stuck to their current bank because of existing overdraft or loan commitments
- 80 % of retailers have seen a sharp decline in service from their banks, with the reduction in customer facing staff the greatest single complaint.
Commenting on the response to the survey, RGDATA Director General Tara Buckley said that it is clear that the banking sector in Ireland is still not functioning when it comes to dealing with retailers. She said that the consistent themes from the survey of high fees, poor service, limited choice and an absence of competitive alternatives should be of real concern to the Government and the Banking sector.
“ It is clear from this survey that retailers, who are at the core of the SME service sector and are significant employers nationally, feel that they have been abandoned by the banking sector. There are real concerns that the banks are operating to an agenda that does not recognise the challenges and opportunities presented by their retailer customer base. The absence of competitive choice is a real concern as is the dominance of the two main banks over the retail sector. The high charges and poor service from the banks needs to be challenged given the absence of competition in the market. This is an area where the Government could usefully step in to address the imbalance involved.”
Buckley said that the Government should examine ways of unlocking competition and choice in the banking and financial services sector in Ireland. In particular there needs to be an action plan led by the Government with the Central Bank to tackle areas where inadequate competition in banking is leading to high bank fees, low levels of switching and poor service.
“ The Banks have shown that when left to their own devices they will not behave reasonably or fairly with their customers – there is an obligation on the Government and the regulatory authorities to ensure that an absence of competition in such an important area of the economy does not damage local businesses which have real potential to contribute positively to economic recovery.” Buckley said.
RGDATA said that it would be presenting the results of its survey and related commentary from retailers to the Minister for Jobs, Enterprise and Innovation Richard Bruton TD and the Minister for Finance, Michael Noonan TD to secure an appropriate Government response to the issues raised.
See comments below by Retailers from banking survey.
For further information please contact: Kathleen Cahill, Communications Manager, RGDATA.
Ph: 01 2887584
RGDATA: The Retail Grocery Dairy & Allied Trades Association is the representative association for over 4,000 independent family owned grocery shops, convenience stores, forecourt stores and supermarkets in Ireland.
RGDATA is the longest established retail trade association representing the independent grocery sector for over 70 years.
Comments from RGDATA Banking Survey
Supermarket Owner Co Laois: Bank of Ireland
“The restrictions have caused my business to lose turnover and suppliers. The attitude of a bank employee has been detrimental to my business with her intimating she would call in the receiver despite my business being profitable. Her claim was that she could do this because the bank have a debenture over my business. This has caused me extreme hardship and had a detrimental effect on my mental health.
I feel my bank are in no way trying to help me grow my business. In fact they are doing the complete opposite.
Over the past seven months my turnover has decreased due to cashflow constraints placed on my business by Bank of Ireland. My business was growing year on year at a rate of between 3 to 5 percent. It is now in decline due to these constraints. My accountants are currently trying to find a suitable financial solution which will allow my business to start growing once more. I have found Bank of Ireland to be extremely arrogant and incapable of understanding my business over the past 12 months. I would hope I can find a bank which is willing to work with me going forward and provide my business with the facilities it needs to return to growth.”
Convenience store owner, Galway: AIB
“Tried to increase overdraft or to get extra funding last year. I spent €2.5k on accountant doing projections etc requested by bank. Process took 4 months to be refused despite being given all postitive vibes through out process”.
Supermarket Owner, Co. Louth - Bank of Ireland
“The Bank of Ireland has become an extremely disappointing bank to deal with. I have a top grade account (according to the branch manager). The manager is at a loss as to why I was refused a loan. He's not long left Ulster Bank and found it hard to understand the decision of the underwriter in Dublin having given his seal of approval for my application.
My bank charges have increased 400% over last 3 years. They average €150 per week.”
Supermarket Owner Co Roscommon: Bank of Ireland
“Bank fees have become one of the more expensive services we use of late, I feel there's no other institution that would just get away of doubling fees and have no objection from anyone. I feel we have been pushed into a corner with no choice as they have a monopoly on business in small towns where they have no opposition. They have increased all the fees on what small business use .i.e lodging cash, lodging cheques, buying in coin/notes.
It's just another cost that's getting harder to build into our margin to survive in business. Our fees used to be flat fee of €250 per quarter when we banked with NIB in 2006, now they're average €1,800 per quarter and similar if not lower level of business going through.”
Convenience Store owner, Dublin: Bank of Ireland
“It is obvious that my bank is taking advantage of small businesses poor cashflow to increase our bank charges because we are not in a position to bargain with them and move bank. As businesses continue to survive post recession and build again, I think it is morally wrong for a bank to create such onerous increase in bank charges so soon when most small business can’t handle such overhead increases.”
Supermarket Owner, Co Galway: A mixture of banks
“Our relationship with our branch is at an all time low. We bank with them because we have no other options. They have shown nothing but disdain for us and our business over the last few years. If I treated my customers like that I would be out of business long ago”.
It sickens me to hear their advertisements saying they are here to help business people. They offer no help whatsoever. They are a liability to our business.
Supermarket owner, Co Meath: AIB
“Chronic staff shortages at branch level, leading to long queues.”
Convenience store owner, Limerick: Bank of Ireland
“I find it very frustrating that I cannot phone the bank direct. I am put on to a call centre who seen to know nothing only keep asking you security questions”.
Supermarket owner, Co. Cork: AIB
“Cannot change banks as overdraft facilities would be impossible to get without security - security is held by existing bank on loans”
No face to face, no contact, very poor service”
Convenience store owner, Co Kildare: PTSB
“We are keeping banks in business, but you get the feeling you are a nuisance and business customers are not treated any different to the other customers”.
Supermarket Owner, Co Donegal: AIB
“Banking charges are increasing, but service levels are being reduced. It is difficult to get day to day queries resolved as calls are received in a centralised department, not a local branch.”
Convenience store owner, Co Tipperary: Bank of Ireland
“Banks are making it impossible to deal with them, they want your business but not the cash that comes with it, I was told by the bank when looking for a short term overdraft that because I was a retailer who has a large cash flow that I view as being a greater risk than a business with electronic payment as it main source of income.”
Supermarket owner, Limerick: Bank of Ireland
“Regarding accessing credit - it took 12 months to get approval.”
Supermarket owner, Cork: Bank of Ireland
“Service level is a disaster – everything from no cash counters to not being able to ring the bank direct (goes through call centre). We used to have a relationship and view them as a partner in our business. They are now seen as a adversary whose sole aim is to increase the amount of profit they can make from us”.