AIB overcharging forex customers

Allied Irish Banks, last night admitted overcharging foreign exchange customers by as much as €14m over a period of years.

The Irish Financial Service Regulatory Authority watchdog body said they were investigating the affair.

AIB confirmed the overcharging in a statement and apologised for leaving the matter unaddressed for such a long period.

But the bank also said the nature of the transactions meant it would not be possible to identify all the cases involved, and discussions with the financial authorities were on-going about how to make reparations.

It is understood that a bank software system used for charging customers on foreign exchange transactions had been known to be causing problems for as long as 10 years.

The IFSRA said they received an anonymous telephone call two weeks ago, making “certain allegations” relating to claimed irregularities over foreign exchange charges at AIB dating back to 1996, and the issue had been raised at a meeting with the company last week.

Mary O’Dea, the authority’s consumer director, said it was being regarded as "a very serious issue".

A full report was being sought on the matter, which was being actively pursued at senior level with the banking group.

AIB had been requested to immediately report on the extent of the impact on its customers, to examine how compensation can be appropriately paid, to identify how the matters could have arisen and persisted over an extended period of time and to identify remedial measures to ensure that such matters could not arise again.

Ms O’Dea said: "We are putting together all the facts to make sure that customer can get full restitution for any overcharging that took place over the period of eight years.

“We need to be very clear about the amount involved and the volume of transactions and how the failures were allowed to happen."

The transactions involved were understood to relate to drafts rather than cash and in order to deal with an anticipated rush of queries, the IFSRA tonight extended the operating hours of special help telephone lines.

AIB executive John Hickey said: "We were first aware of the full extent of this in the last few days at senior management level. We had identified in 2002 that there was a problem, but it was at a level where there was not appreciation that we had approval to charge the margins we were at that time."

He added: "We fully accept that we made a mistake and we are very sorry and embarrassed by it.

We are determined that AIB will not benefit from this error on our part. We will identify the customers we can, and pay restitution to them."