The Competition Authority has stepped up its investigation of the Irish banking sector but is unlikely to issue recommendations on how customers can get a better deal on current accounts and small business loans for about 12 months.

The authority's chairman, Dr John Fingleton, said that, while he could not guarantee that its investigation would make these services cheaper for consumers, he was confident they would benefit from its recommendations.

"We are not a dictator. I can't give guarantees on anything, especially something that requires action by the High Court or by the Government. We will be putting forward the best analysis of this market and looking at it in the interests of consumers," he said yesterday.

The authority expects to be able to make recommendations to the Government in the middle of 2004 and will also be sharing its findings with the Office of the Director of Consumer Affairs (ODCA) and the Irish Financial Services Regulatory Authority (IFSRA).

Yesterday, Opposition politicians criticised the length of its inquiry.

Fine Gael's finance spokesman, Mr Richard Bruton, said that consumers and businesses were being left to suffer for too long. "With this Government, we are always one review or one study away from action," he said.

Labour Party finance spokeswoman Ms Joan Burton called for swifter action to prevent banks using consumers as "profit fodder". She said there were strong grounds for concern about competition in the sector.

In a submission to the Competition Authority, the ODCA accused the Irish banks of operating as a "club" and recommended wide-ranging reforms to ensure that consumers get a better deal.

Yesterday, the Competition Authority issued a consultation paper on the Irish banking sector and is inviting the general public, trade and consumer associations, and financial services companies to respond with their comments by September 30th.

The authority will then obtain data from Irish financial institutions and may yet widen its examination to areas such as mortgages and credit cards, if it feels it is warranted.

Dr Fingleton said that consumers should not conclude that facets of the banks' businesses not included in this examination were necessarily competitive.

The authority is already studying the level of competition among the professions - something that could have a knock-on effect on mortgage lending as consumers are faced with expensive conveyancing costs if they want to switch to another institution.

Meanwhile, the IFSRA is also looking at the speed at which Irish banks and building societies pass on interest rate changes to customers.

The Competition Authority believes personal current accounts and lending to small businesses are the least competitive areas within the Irish banking sector and result in consumers being charged excessively.

Most individuals in the State operate a current account and this tends to be the key vehicle through which financial institutions sell other products to customers.

The primary problem that must be tackled is the money transmission system or clearing system - the structure which is operated by the big banks to process payments.

Loans to the small business sector have also been included because of the difficulties many experience when trying to secure loan finance and the limited number of providers.

The authority can initiate High Court actions against financial institutions if it establishes that they have breached competition law and are colluding to maintain high prices for customers.

It is ultimately up to the Government to legislate to tackle key elements of banking operations and effectively force the financial institutions to reduce the cost of banking.

Dr Fingleton was hopeful that investigations into the costs and charges associated with credit cards, which are being undertaken in the UK and Europe, as well as a number of court challenges in the US, will have an impact here. If this is slow to filter through the authority will focus on this area, he said.