Overcharged bank customers 'can be traced'

At least two thirds of the foreign exchange customers who were overcharged in a scandal at Allied Irish Bank can be identified, a financial watchdog claimed today.

Liam O’Reilly, Chief Executive of the Irish Financial Services Regulatory Authority, said the bank was setting up a compensation system as it emerged the total amount due to customers may reach €25m.

“Over 60% of the consumers look like they can be identified, 66% of the consumers can be identified,” he said.

“The individuals have not been identified yet, but it has been calculated using very sophisticated techniques that we can actually get at these individuals and AIB will be setting up a system whereby the consumers can get in touch with them to make sure that they are recompensed for what happened, including interest.”

The IFSRA launched a probe after Ireland’s biggest banking group last week admitted it overcharged foreign exchange customers by as much as €14m over a period of years.

AIB also apologised for leaving the matter “unaddressed for such a long period”.

The bank placed €25m on deposit with the Central Bank of Ireland this morning to cover the total amount, including interest, by which customers may have been overcharged.

It originally claimed the nature of the transactions involved 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.

But Mr O’Reilly said that in a situation where an honest mistake was made if an institution is encouraged by the regulator, they can usually find information which could be used to get money back to the consumer.

“As the regulator, we are putting the consumer at the heart of our work and as a result of that we want to make sure that the consumers are fully recompensed, which is our major objective,” he said.

It is understood 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.

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.

Bank chairman Dermot Gleeson apologised again today to customers who had been overcharged and insisted all efforts would be made to trace and reimburse them.

“Charging the wrong price, however it is occasioned, is entirely unacceptable,” he said.

“Customers who paid the wrong price for foreign exchange transactions will be reimbursed with interest.

“We will seek to address simply and speedily the cases of all customers entitled to reimbursement.”

Mr Gleeson said nothing discovered during the inquiry so far indicated that responsibility for what happened laid with junior staff.