‘Bad’ customers charged more

NATIONAL Irish Bank overcharged thousands of customers on fees and interest rates because of the workload they imposed on its employees.

The report found that over a 10-year period NIB loaded on millions of euros in fees and interest payments and that most of these customers have yet to be repaid.

The report said in most cases customers faced higher fees because they were “troublesome” or maintained “bad accounts”.

Interviewed by the High Court inspectors, one employee explained why customers faced higher interest and charges: “You were not doing the interest on the basis of boosting revenue to the bank, you were doing it on the basis that the customer you picked was entitled, by virtue of the amount of additional work he caused you.”

The practice of charging higher interest to customers was found to have been widespread across NIB’s branches and that the level of work done was not a legitimate reason to increase rates.

Asked how the bank kept up the systematic overcharging for so long, another branch manager said: “The interest charge was posted on the statement and sent out to them so that it left [them] to query the interest charge if they wished.”

The investigators found that when customers did complain it took some time for their query to be dealt with. The report also found that when improper charges were uncovered by NIB’s internal audit team, the money was not repaid immediately.

The loading on process was uncovered in 1990 by NIB’s then chief executive Jim Lacey who told senior managers in a memo it was a practice the bank “must cease immediately for obvious reasons.”

NIB has not repaid all of the customers entitled to refunds. Around €1.9 million has so far been returned but full compensation will cost the bank a further €10.6 million.

Small business body ISME was among those who reacted angrily to the report into overcharging.