Bank to repay €15m over loans protection

Around €15m is to be refunded to Bank of Ireland customers, it emerged today.

BoI admitted almost 65,000 people, who paid off personal loans early, were owed money on premiums for their Payment Protection Insurance policies.

And the bank said the final bill for refunding customers could hit €15m after inconsistencies in repayment schemes were uncovered.

BoI said it had issued 470,000 PPI policies as part of 1.5 million personal loans.

Customers took out the protection plan as part of personal loans to cover the debt in the event illness or death.

A spokeswoman for the bank said 170,000 car and personal loans had been paid off early but that 65,000 customers were due a refund on their PPI premiums.

She said the full extent of the inconsistencies in refunding would not be known until the completion of the investigation.

The issue was uncovered during an industry wide review of the insurance product requested by the Irish Financial Services Regulatory Authority.

IFSRA identified a number of issues relating to the sale of payment protection insurance and asked all banks to submit information on their sales policies and procedures.

A spokeswoman for Bank of Ireland said the company regretted procedures had not been implemented consistently.

“Given the bank’s commitment to the highest standards of customer service such a lapse is clearly unacceptable,” she said.

“The bank will ensure that all customers affected will be refunded the outstanding portion of their premium together with interest on the refunded amount.”

BoI said all affected customers would be contacted with and refunded. It is understood the repayment scheme could take a number of months.

An IFSRA spokeswoman said: “We are actively engaged with Bank of Ireland at a senior level to determine the extent of this issue and to ensure that all affected customers receive a full and speedy refund”.

A helpline has been set up by the bank to handle customer queries on 1800 88 28 28.

Larry Broderick, Irish Banking Officials Association general secretary, said a detailed, independent and totally transparent investigation was needed to prevent a repeat.

Mr Broderick said he would be seeking assurances from BoI chief executive Brian Goggin to ensure junior staff were not scapegoated for the mistakes.

“The reputation of Irish banking has taken a severe battering in the past year and this latest development does little to inspire confidence,” Mr Broderick said.

“It is a cause of serious concern that a modern bank could be making errors on such a widespread scale affecting thousands of customers."