Banks paid wrong interest rates

MISLEADING brochures, incorrect interest rates and mislaid application forms are just some of the discoveries of a Central Bank inspection of banks.

Bank customers could now be in line for refunds as part of the inspection of products sold by banks with promotional interest rates. It identified “a number of concerns” including interest rate errors on home loan products. However, the Central Bank did not name the delinquent banks.

It found that in the case of several home loan products, errors were identified where customers did not receive the full period (365 days) at the promotional or discounted rate.

It said fixed rate home loan customers were also affected, although these loans were not within the scope of this inspection. It said that errors could have been avoided if the product development process had included a “thorough end-to-end check of IT systems at the banks concerned”.

An investigation is ongoing at one bank to rectify the issue, while refunds are being issued to customers affected at another.

The Central Bank said it is “particularly concerned” to see that IT systems could not deliver the terms and conditions of the products examined, despite, it said, having previously raised this issue with the banks.

Director of consumer protection Bernard Sheridan said: “Some promotional rate products can appear to be very attractive to consumers. However, consumers must be aware that the benefits usually only apply for a limited time and can be subject to restrictions.

“Our inspection found that, in a number of cases, consumers did not receive the full benefit promised. We are working to ensure that affected customers are identified and refunded by the institutions.”

The Central Bank also said that in the case of one deposit product, two brochures were examined and were considered to be “unfair and misleading” to customers.

It said the brochures advertised an attractive equivalent annual rate and information relating to the minimum rate payable, which should have been highlighted, was not “clearly presented to the customer”.

It said that within nine months of issuing the brochure, the rate payable on the account was the minimum rate.