AIB to refund €4m to 40,000 customers after overcharging error

MORE than €4 million is to be refunded to approximately 40,000 AIB customers after the bank admitted to an overcharging error.

The announcement, which will see average refunds of €100, comes just four months after the bank confirmed it had overcharged 400 mortgage holders by almost €400,000.

Reacting to the news, the Financial Regulator said it is to review how it and the banks deal with incidents of overcharging.

In a statement issued yesterday, AIB said the latest error led to some personal accounts being classified as business accounts and vice versa, resulting in incorrect fees/charges and interest being applied to customer accounts.

The bank estimates that 40,000 accounts may require a refund of €4m plus compensatory interest.

AIB said the incorrect classification may have arisen over several years. The bank informed the Financial Regulator of the problem when the issue was identified in November 2008.

At the request of the regulator, independent assurance is being provided by KPMG and a process is under way to identify the accounts which might be affected.

The bank said it will contact all affected customers to apologise and ensure them they will be reimbursed by March 31 next year.

Head of financial regulation, Matthew Elderfield, said the regulator was “concerned” at the number of overcharging incidents and confirmed it is to carry out a review “to strengthen its approach concerning the timeliness of resolving overcharging in firms and the grounds for enforcement actions against such failures”.

Director of the Consumer Association of Ireland Dermott Jewell welcomed the review and said banks need to incur financial penalties for repeat overcharging.

“The record in this area of certain banks is quite appalling.

“The regulator certainly needs a different approach to this. After a first warning, there needs to be a meaningful financial penalty that would either double or triple for a repeat offence.”