Banks may have to pay back €100m to customers
Chairman of the Joint Oireachtas Committee on Economic Regulatory Affairs, Michael Moynihan TD, has confirmed that two whistle-blowers have been in contact with the office of Financial Regulator Matthew Elderfield, outlining fresh allegations of systematic overcharging of customers within the system and in particular at AIB and Bank of Ireland and a number of state-backed financial institutions.
Mr Moynihan would not outline the nature of the allegations but it is understood that each whistle-blower has provided evidence of separate rip-off schemes employed by the banks to the regulator.
Just last week Mr Elderfield told the Oireachtas Committee chaired by Mr Moynihan that overcharging was a major concern.
“Over-charging is a continuing concern. We have decided to take our response to a new level by making it clear that this is now an area for enforcement action. We have written to those firms that have previously notified us of over-charging cases to set specific deadlines under threat of enforcement action.
“We have also written to all firms stating that we are setting standard deadlines for speed of communication and remediation with customers.
“We are considering enforcement actions that might be appropriate in light of the track record of complaints handling we have seen. I fear that some level of over-charging may always be with us due to systems problems, but I want to make sure that firms respond to problems with more energy and speed than in the past and that they are held more accountable for persistent or systemic problems,” Mr Elderfield told the committee.
The latest allegations from the two whistle-blowers are understood to be separate from problems of overcharging which arose at Anglo Irish Bank, where in September the bank’s chief executive Mike Aynsley confirmed that they are investigating overcharging on loans taken out between 1999 and 2004. The bank may have to pay out as much as €100 million when this investigation is complete.
“We’re thinking at this stage that it (the cost) is more likely to be in the €30m to €50m range. It’s a lot of money but certainly not as big as the billions that we normally talk about in this bank,” Mr Aynsley said at the time.
Irish banks have already been forced to pay back some €180m to customers overcharged in the last 10 years.
