Inquiries into AIB must be thorough

IT is becoming increasingly obvious to those who hadn’t realised it before now, the banks have been ripping us off for a long time.

Just how deep the rip-off has been will probably never be known. Suspicions lurk and it is difficult to know if the full extent of their power to manipulate prices and cost of services will ever be unveiled.

In the past, AIB displayed huge strategic weaknesses in their seriously misjudged purchases, ICI in particular.

Those in the general insurance world the time the deal was done say it was well known in British insurance circles that ICI was a basket case.

AIB walked blinkered into it and then used the scare tactic that the whole country would be brought to a standstill if the government of the day did not buy out the company.

That ploy worked and AIB walked away from the mess without even a blush.

They deny strenuously the rest of us have been paying for that foul-up through the 2% general insurance levy.

They got away with that disgraceful episode and they also got away with the €690m scandal at Allfirst. They got away lightly, too, over the DIRT scandal and were sailing along nicely until the overcharging on foreign exchange deals broke.

On top of that, came the revelations that old-age pensioners were mis-sold products, an allegation subsequently also made against Bank of Ireland.

On the endowment mortgage side, the likes of Irish Life & Permanent have a stack of investments that will not meet the mortgage commitments of many of those who opted for endowments.

Not a word about that either. They have written quietly to their unfortunate customers, telling them to bump up their endowment investments or face repayment shortfalls.

The list is getting longer. From the ordinary citizen's perspective, their treatment at the hands of financial institutions has been outrageous. The only ones to do well have been those in the golden circle. All we can hope for now is that the two inquiries into the activities of AIB one by IFSRA and the other by former Comptroller and Auditor General Lauri McDonnell will do more than simply finger a few middle-ranking managers within the group.

This malaise is much wider, however, and without doubt, IFSRA is faced with a challenge which, if carried out in a thorough way, will finally reassure the consumer they finally have a friend in high places to protect their interests.

It should consider calling on all the financial institutions to examine all of their charges and to vouch for them in writing. They should be given an appropriate time to do that and to communicate any misdeeds without fear of incurring serious penalties, a form of amnesty in other words.

After that, IFSRA should seek and be given all the powers required to ensure that those who are discovered to have overcharged or misled consumers will pay a high price.

It is ironic that at a time of unprecedented economic prosperity that so much cynicism persists about the apparent contempt financial institutions show their customers. It is time that we had accountability from the top down.

Where this is found wanting, then those in charge should do the honourable thing and go.

If IFSRA is to have any real credibility from a consumer perspective, then without doubt, it will have to demonstrate that it will act without hesitation when it becomes clear that the rights of consumers are being trampled on, otherwise the new Irish Financial Services Regulatory Authority will be no more than a charade and consumers will continue to suffer mistreatment from the banks and insurance companies.