The post-2008 financial crisis-era cap on bankers’ pay remains “entirely appropriate” given the “demonstrable and significant harm that retail banks have inflicted on their customers as recently as [last year]“, the joint Oireachtas finance committee has found in a wide-ranging report on the domestic banking sector.

Summarising the committee’s engagement with individual banks, the Central Bank, trade unions, consumer groups and other stakeholders over the past 12 months, the Report on Banking 2022, published on Wednesday afternoon, makes 20 separate recommendations to the sector. It covers issues ranging from the withdrawal of Ulster Bank and KBC Bank from the market to the threat to in-person banking services from digital challengers and bankers’ pay.

It recommends that the Central Bank reform the switching code used to transfer a consumer’s accounts and direct debits to a new bank. It said the code “was not an appropriate process” to deal with the large numbers of customers who have had to switch banks as a consequence of Ulster Bank’s and KBC Bank’s phased withdrawal from the market.

Separately, the report recommends that the Government introduce legislation to force retail banks to provide physical cash and deposit services in rural areas.

How does VAT in Ireland compare with countries across Europe? A guide to a contentious tax

---

‘I was a cleaner in my dad’s office, which makes me a nepo baby. I got €50 a shift’

---

Will we have a tax liability if Dad gives us his home while he is alive?

---

Finding a solution for a tenant who can’t meet rent after splitting with partner

---

[ Microsoft reported to plan thousands of job cutsOpens in new window ]

In his foreword, finance committee chair John McGuinness said the report is “about how much a government will allow its people to be mistreated by powerful institutions and the central and very responsible role bankers, including our Central Bank, and other professionals in our society have”.

The Fianna Fáil TD for Carlow-Kilkenny said: “Banking advertising never avers that ‘our responsibility to our shareholders’ takes precedent over duty of care to clients and society. But, when push comes to shove, the pursuit of profit often eclipses responsibility to individuals, families and businesses, which leads to distressing outcomes, not least lack of respect for pillars of our economy and society, including politics.”

On the issue of bankers’ remuneration, the report notes that the Government’s plan to remove restrictions on executive pay and bonuses in the sector is “inappropriate” and could damage already-dismal levels of public confidence in the sector.

Following a review by the Department of Finance, the Cabinet in November approved a proposal to reintroduce bonuses and gradually lift a €500,000 executive pay cap across banks that were bailed out by the State in the wake of the 2008 crisis.

Then-minister for finance Paschal Donohoe told the finance committee at the time that the decision to relax the pay restrictions was due to the growing challenges that the three remaining domestic banks – Bank of Ireland, AIB and Permanent TSB – are facing in hiring and retaining key staff amid competition for talent from other financial firms and technology groups operating in the State.

In its report, the committee has recommended keeping the restrictions in place.

The report said the Government was pressing ahead with the plans “without any evidence of cultural change in the sector”, noting that Bank of Ireland, AIB and Permanent TSB have been fined a combined €204.8 million since 2019 over various breaches related to their handling of the tracker mortgage scandal. The largest and most recent of those penalties, a €105.5 million fine against Bank of Ireland in September last year, related to regulatory breaches, some of which occurred as recently as June 2022.

“These restrictions were rightly imposed in recognition of the focus placed by bankers on increasing their own pay rather than the interests of consumers and the stability of the financial system,” the committee said. “This was and continues to remain entirely appropriate, further justified by recent failings in domestic retail banks and their failure to put the interests of consumers first.”

Speaking to reporters at the report’s launch in Leinster House, Mr McGuinness described the notion that the chief executive of an Irish bank could be paid in excess of €1 million as “obscene”, given the number of legacy issues, particularly tracker mortgage complaints, that remain outstanding.

Sinn Féin finance spokesman Pearse Doherty, a member of the committee, said that with 1,000 tracker mortgage cases still with the Financial Services and Pensions Ombudsman, the scandal is not just a “thing of the past”.

He said the Government’s decision to gradually roll back the restrictions on pay and bonuses was an attempt to return to the banking sector to normal after the upheaval of the past 15 years.

“In my view, we should never go back to that normal,” he said.