BoI pays out 326,000 after error

David Clerkin

Almost 90,000 personal and business customers were affected by the error, which mainly related to transactions carried out before 1998. The bank identified two business customers in line for refunds of more than E500, but said “the vast majority” of cases involved amounts of less than E2.

The bank’s computer systems mistakenly applied a higher fee to automated transactions that were processed by phone or online.

The transactions involved, which included bill paying and transferring funds, were instead charged as if they had been processed manually by a staff member, which was normally more expensive. Customers were charged between 4c and 9c more per transaction than they should have paid.

The bank has since revamped its charging structure and introduced a simpler format that allows customers pay a flat quarterly fee or a fixed amount per transaction.

The error went unnoticed by customers at the time but was picked up earlier this year during a bank-wide trawl of charging practices. Most banks undertook to review their charges after last year’s controversy at AIB, which was landed with a 34 million bill after illegally charging customers for foreign exchange transactions over a lengthy period.

This was over 100 times the size of the payout facing Bank of Ireland that arose from the episode uncovered yesterday.

The bank has already written to customers to apologise for the error and has credited refunds to their accounts electronically. A small number of customers, whose accounts were closed since the overcharging took place, received cheques.

Payments to customers included interest on the original sums overcharged. The rate used to calculate the interest payments was based on the rate applied by the bank to overdrafts.

The bank said yesterday that it was “constantly vigilant” and kept its systems under review to ensure that customers were charged the correct amounts for its services.

Last year saw a number of high-profile companies making repayments to customers after discovering suspect charging practices. These included state-owned power supplier ESB, insurance company Axa, phone company Eircom, mobile operators O2 and Vodafone and mortgage lender Permanent TSB.

Bank of Ireland already paid out around E15 million earlier this year after admitting it had deducted too much money from customers who had taken out payment protection insurance on certain loans.