AIB overcharging scandal hits 200,000 accounts, 1m transactions

THE AIB overcharging scandal affected more than one million transactions involving close to 200,000 accounts, bank officials revealed yesterday.

Apologising for the bank's failure to identify the problem for eight years, AIB chairman Dermot Gleeson told the Oireachtas Finance and Public Service Committee that disciplinary action against those responsible was imminent.

Reacting to criticism from committee members Mr Gleeson said he accepted responsibility for the blunders at the bank.

"We failed to operate that statutory system and thereby failed in our obligations to the regulator. We failed to comply with the law and that is a serious matter," he said.

However, Mr Gleeson insisted customers had not suffered since AIB's rates on foreign exchange transactions, although not authorised, were the same as other banks. He also denied AIB had gotten off lightly.

"In the last three or four months the regulator has brought about a situation that is costing us €50m," he said.

AIB has discovered 1.1 million foreign exchange transactions which are eligible for refunds involving 173,000 accounts, going back eight years. €12.7m of the €26.1m due for foreign exchange transactions has been paid.

Another €8.1m of arrears errors due on other products will be paid by the end of this year.

Mr Gleeson denied a culture of overcharging was responsible for the errors.

Instead, he said, the bank's internal investigations had found an unacceptable "degree of error in the dependability with which we delivered a small number of products to our customers".

Addressing the committee yesterday, AIB chief executive Michael Buckley defended the bank's internal audit functions saying it was "turning up lots and lots of issues" which were dealt with and rectified.

"It's awful and it's embarrassing that these issues did not come up the management line in a way that enabled them to be put on the audit committee's agenda," he said.

Independent senator Shane Ross accused management of washing its hands of the affair at the expense of junior staff. "We have had a series of extraordinary incidents happening which, combined, make up something extremely rotten in themselves. It also appears board members, who are ultimately responsible, have escaped," he said.