NIB to pay out €10.6m to customers

NATIONAL Irish Bank is to pay €10.6 million to almost 77,000 customers over the next 12 months as a result of an examination by the High Court Inspectors into fee overcharging between 1988 and 1998.

Last night, NIB said it would commence making an initial tranche of payments to 47,000 people of €2.8m, 59 a head on all fees of €13 (£10) or less, regardless of whether the customers involved were overcharged or not.

Over the next 12 months the bank will pay the remaining €7.8m to 30,000 customers where fees overcharging of greater than €13 is involved.

The payments come following the criticism of the Bank's procedures and controls for the manual amendment of fees and interest during the period 1988 - 1998.

"Whilst manual amendments to the computer calculated fees and interest were a legitimate part of its systems and processes, the Bank's controls on how such charges were applied were not considered by the inspectors to be adequate," the bank said.

NIB said it retains the records of most though not all the fee amendments made during this period.

"However, as these events go back some 16 years, what is sometimes missing is the documentation which would allow us to see whether the charges were valid or not. With the assistance of Lexecon, international experts in reimbursement schemes, and based on records which are still available, the Bank has calculated the percentage of fee amendments that it can validate. This comes out at almost 80% over the period 1988 - 1998," the bank disclosed.

The bank said that all customer accounts impacted by manual fee or interest amendments during this period are being examined and where records to validate amendments are not available, customers are being reimbursed. Each reimbursement will include interest calculated from the date of each amendment to the date of payment to the customer.

"To speed the process, where manual fee amendments under €13 have been charged the Bank is automatically reimbursing customers. This is being implemented without any attempt to validate these amendments, regardless of whether documentation to support such amendments is still available," NIB said.

All interest amendments and fee amendments in excess of €13 are being investigated case by case.

"Wherever documents are not available to explain these charges we will reimburse affected customers. We anticipate work on this phase will take up to 12 months to complete," the bank said.

NIB said it has set aside €10.6 million to cover the total cost of this programme.

"Any funds that remain will be donated to our chosen charity, The Community Foundation for Ireland," the bank pledged.

NIB has established a contact line to enable customers to register any concerns and former customers to inform them of their current contact details. The number is: 1850 946 865.

National Irish Bank's Chief Operating Officer John Trethowan said:

"We apologise to everyone who has been affected. This is a comprehensive scheme that gives our customers the benefit of the doubt in every case."