It also reprimanded AIB and in a statement warned of tougher fines for breaches of regulation in future.
Finance houses can expect increased enforcement activity, based on existing powers, new powers under the Central Bank Reform Act 2010 and new powers proposed for 2011.
“We will not hesitate to use the full extent of our sanctioning powers where necessary,” the director of enforcement Peter Oakes said in a statement issued by the Central Bank yesterday.
The new directorate has asked the Government to beef up the range of sanctions that may be imposed, including a doubling of the amount of penalties which can be levied against individuals and firms to €1m and €10m respectively. The Central Bank has also asked for more powers to help it gather information.
The Central Bank said AIB breached the consumer protection code that sets out how banks should deal with consumers, in three ways over a number of years.
In effect the governing authority said there had been an “unacceptable delay” in notifying customers of overcharging issues and repaying those customers.
AIB was also negligent in failing to have adequate systems and controls in place to deal with overcharging issues when they arose.
It also failed to ensure that it did not keep charging credit card customers for payment protection insurance, after they changed their minds about having such cover in place.
Most of the customers affected have been refunded with interest, but in a further criticism, the bank said AIB failed to put enough resources into rectifying the problems leading to undue delays in rectifying those problems.
In a separate development, NCB Stockbrokers has been fined €100,000 and reprimanded by the Central Bank.
This was a result of inaccurate reporting of some trading activities by the stockbroker to the authorities.
The Central Bank said the breaches were unintended and that NCB quickly took action to deal with the issues that had arisen.