IFA Farm Business Chairman James Kane has hit out at the ‘sharp practices’ that the banks are engaged in by increasing the costs of borrowing for existing farm and other small business customers.
Mr Kane said, “Over the past year, interest rates and other borrowing costs have increased for farm business customers as the financial institutions have implemented unilateral changes to existing accounts. This has included increased use of fees and charges, and adjustments to existing agreements (e.g. movement from Euribor to the Bank Cost of Funds as a reference rate).”
He continued, “The additional costs being borne by customers are putting pressure on farm incomes and the viability of farm enterprise, deterring investment and undermining the competitiveness of the agriculture sector.”
James Kane said, “In different times, customers would be advised to shop around but the reality is that, with the lack of competition in the banking sector in Ireland, and the high costs of providing security to new lenders, there are almost no options for farmer customers to move between banks in response to price rises.”
He concluded, “It is not acceptable that some of the banks have moved towards less transparent forms of charging, and I have written to the Financial Regulator asking him to investigate these practices and to take action to prevent the banks taking advantage of their farm business and SME customers.”