AIB is to refund €3.1m in payment protection insurance premiums to 11,500 customers — an average of €270 each — after the bank uncovered a “breakdown in its verification systems”.
AIB said it had started to change its processes to eliminate the problem, which it categorised as being processing mistakes.
“AIB confirms that all refund cases in this current issue are focused on breakdowns in its back-office verification systems/processes.”
The mis-selling of payment protection insurance (PPI) products is the subject of an investigation across the banking sector by the Central Bank’s director of consumer protection, Bernard Sheridan. It is understood the bulk of the refunds being paid by AIB at this time are not in this category.
The bank examined the sale of what it describes as “optional insurance products” sold in conjunction with credit cards which includes payment protection plan, travel insurance and card protection. The bank said it discovered discrepancies regarding validation of customer information.
Customer complaints prompted the internal review of all “relevant” credit card accounts to ensure that AIB’s documentation and subsequent processing was consistent with customer instructions.
The bank said: “The review clarified the eligibility of the customer to avail of the benefits attaching to each of the optional insurance products. The Central Bank of Ireland has been made aware of this matter. We acknowledge that the Central Bank is conducting a review into the sale of PPI which also encompasses part of this issue.”
Thousands of customers who bought PPI products up to 10 years ago and retain accounts with AIB can expect to have the refunds lodged to their accounts in the coming days. Other customers will be contacted by post. AIB said it apologises to all affected customers.
The three main problem areas involved customers:
* Who signed to both accept and decline payment protection/travel insurance/card protection as part of the application process and where AIB did not clarify the customer’s requirement;
* Who provided contradictory information relating to employment, for example, on the credit card section of the form, the customer indicated they were not working and in the payment protection section confirmed they were, and the discrepancy was not picked up;
* Whose credit card accounts were in arrears from June 2009 were advised that their payment protection policy would cancel if two consecutive payments were missed. Unless the customer missed a third consecutive payment, the bank failed to cancel the policy and the customer continued to be insured.
* AIB customers who have any queries should contact AIB’s customer service team on 0818 300 073.
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