The banks have been ordered to meet the Minister for Social and Family Affairs, Séamus Brennan, following publication of a report which said lone parents were being pushed towards moneylenders because they were unable to open bank accounts.
The report Do The Poor Pay More? commissioned by the One Parent Exchange Network (Open)also recommended that the ESB be asked if it was evading regulation by charging 22.9 per cent interest on hire purchase agreements - just under the level at which it would have to register as a moneylender.
Mr Brennan has also sought a meeting with the ESB and said the findings of the report were "totally unacceptable".
"I have this morning spoken to the Bankers' Federation and asked them to come and meet with me urgently. I would like an explanation as to what is going on. And I have asked the ESB to come visit with me also."
He said he had two simple questions for the organisations. "'Is what is in this report true? And if it is, what are you going to do about it?'
"I want the banks, the building societies, the financial service authorities and other agencies to identify ways that they can arrive at more reasonable and flexible arrangements," Mr Brennan said.
The report found the average lone parent household was in debt to €8,000. Families living on welfare were being offered unsolicited credit yet they were unable to open bank accounts as they did not have the necessary photographic identity, in terms of passports or driving licences.
Mary O'Dea, consumer director of the Irish Financial Services Regulatory Authority (Ifsra), said some bank staff did not seem to be aware of the full list of acceptable forms of identity for opening bank accounts.
The report also found that parents on low incomes felt pressurised into making "voluntary" contributions to free schools.
Mr Brennan said the research painted a "disturbing picture" of lone parents caught in a cycle of debt and borrowing. Because they could not open bank accounts, they were forced to go to illegal moneylenders, he said. The report found that some moneylenders were charging up to 200 per cent interest.
Ms O'Dea said IFSRA was proposing a ban on unsolicited pre-approved credit. It also wanted to stop credit card companies from increasing customers' spending limits, without a specific request from the customer.
This was welcomed by Open director Frances Byrne. She said the practice of unsolicited credit must be "regulated and restricted". Ms O'Dea said there were 55 legal moneylenders in the State, but vulnerable people did not know the difference between legal and illegal operators.
Meanwhile, the Irish Bankers' Federation (IBF) said it was pleased to accept Mr Brennan's invitation to meet him.
A spokeswoman said the IBF was co-operating with research into exclusion from financial services that was being carried out by Ifsra and Combat Poverty. The IBF had also proposed a "universal bank account" which would give everyone the opportunity to make electronic payments through banks, An Post and perhaps credit unions.
An ESB spokesman said the group was happy to meet the Minister and would be pointing out that ESB credit arrangements were different from standard hire purchase for several reasons.
Customers did not have to have a credit rating, there was no requirement that they hold a bank account, and the company could not recover the goods if payment was defaulted on, he said. Therefore the ESB had to factor this into its interest rate.
