AIB faces trust fund charges scandal

AIB, the country’s biggest bank, was hit by yet another overcharging scandal last night, the third in the past month.

The bank admitted that it had again overcharged customers, this time those holding trusts.

The bank confirmed that it has paid €3.4 million in refunds and compensation to customers or the dependants of customers who held trusts with the bank before 1971.

The bank also confirmed that that it expects to have to pay almost another €2m to the beneficiaries of other trusts that have been wound up.

Earlier this month the bank admitted it had been overcharging foreign-exchange customers by up to 1% and has lodged €25m with the Central Bank to compensate the overcharged customers.

AIB has also confirmed that that more than 500 of its mortgage customers may be due refunds as a result of being provided with payment protection plans without their prior approval since 2001.

Financial watchdog Irish Financial Services Regulatory Authority (IFSRA) said last night it has been aware of the latest overcharging situation for the past couple of years and has been working with AIB to resolve the matter to the satisfaction of the bank’s customers.

“We are involved in a process and are looking at all of their fees and charges and if anything else emerges it will form part of the overall report,” said the IFSRA spokesman.

The latest scandal, along with the other outstanding issues of foreign exchange overcharging and the mortgage protection cover are all part of an investigation currently being carried out by IFSRA.

A report on its findings is expected to be released before the end of June.

In a statement last night, the bank said: “The review showed that the post-1971 AIB fees had been applied to some pre-1971 trusts and, consequently, the excess fees should be refunded and the trust or its beneficiaries compensated accordingly.

“The review found that there were 43 active trusts (i.e. existing cases in which AIB was acting as trustee) which were established prior to 1971, to which refunds were due.”

Fine Gael Deputy Leader and finance spokesman Richard Bruton called on the banking sector to adopt a proper code of conduct following the latest scandal.

“It is also high time for the banking sector to adopt a proper code of conduct to ensure consumer protection across all its businesses,” he said.