AIB move to hike fees for bounced cheques criticised

CONSUMER watchdogs have criticised AIB after the bank decided to increase fees for bounced cheques by 60% to €10 a time.

The bank, which made €1.7 billion profit in the first six months of last year, has also decided to raise to €5.15 the charge for each payment when a customer is unexpectedly overdrawn.

The Consumers’ Association of Ireland (CAI) said the new AIB charges were unjustified and made a mockery of the idea of free banking.

“The news today that the AIB is increasing its charges is bad news for the consumer,” said CAI chairman James Doorley. “We’re concerned that other banks will follow suit and, in light of the current market turmoil, banks here will try and maintain profits by substantially increasing charges and fees to consumers.”

The charges were approved by the Government’s banking watchdog, the Financial Regulator, after AIB notified bosses of the rise in fees.

The CAI said the regulator had approved the rises without consulting consumer groups or other banking watchdogs.

AIB’s rises come at the same time British consumer watchdogs are taking Britain’s big banks to court in a row over sky-high bank charges.

Campaigners say the administration cost of processing a bounced cheque is just £2 (€2.68) yet banks bill their customers as much as £39 (€52.20) a time.

Britain’s consumer association Which has helped bank customers to win refunds on what it calls excessive fees for going overdrawn or writing a bounced cheque.

From March 3, AIB’s fee for each bounced cheque is rising 59% from €6.35 to €10, the second highest such charge in Ireland alongside the Halifax. The same rise applies for bounced standing orders and direct debits.

Only the Bank of Ireland at €12.70 has a higher charge.

AIB is also increasing from €4.44 to €5.15 the fee for every payment made while an account is overdrawn without permission.

A spokesperson for AIB last night said that significant costs are associated with managing unauthorised borrowings and the charges are intended to offset these costs.

“The charges have been appropriately authorised by the Irish Financial Regulator and are considerably cheaper than comparative British bank charges,” said the spokesperson.Extra charges

Banks are making big money from extra charges:

* Bounced cheque, standing order or direct debit.

AIB: €6.35 a time (€10 from March 3).

Bank of Ireland: €12.70.

Permanent TSB: €4.44.

Halifax: €10.

* If a payment from your account causes you to go overdrawn without permission:

AIB: €4.44 per payment (€5.15 from March 3).

Bank of Ireland: up to €10 a time.

Permanent TSB: up to €8.88 a day.

Halifax: €5 a time.

* If you pay in a cheque which later comes back unpaid:

AIB: €4.44 a time (no change).

Bank of Ireland: €3.30 each.

Permanent TSB: €4.44 a time.

Halifax: free.