Consumers Association slams bank culture

The Consumers Association of Ireland has said any remaining public faith in the banking sector was now gone after Allied Irish Bank admitted years of overcharging.

Allied Irish Bank were today forced to pay out €34.2m to customers.

Chairman Michael Kilcoyne said: “The banks have no respect for the ordinary consumer. These guys were just doing what they liked and if they ripped off the consumer, they just got a bigger job. It’s not just AIB but the whole lot of them.”

He added: “The only difference between a bank and a bank robber is that a bank robber puts a gun to your head.”

The Irish Financial Services Regulatory Authority found AIB overcharged customers and broke the law by failing to notify the regulator of increased foreign exchange costs.

The payout includes €25.6m relating to foreign exchange charges, €500,000 in other notification breaches and €8.1m in other charging cases.

Between September 1995 and April 2004, an estimated three million foreign exchange transactions were charged at 1% by AIB staff rather than the authorised 0.5%. In the largest single transaction, a business was charged an extra €40,000.

AIB will also have to refund €8.1m to 90,000 other customers for overcharging in 24 separate categories.

The Labour Party said it was a shocking indictment of banking malpractice.

Finance spokeswoman Joan Burton TD said: “Why did these practices go on for so long within AIB and why did nobody seem to do anything about it?”

IFRSA chief executive Liam O’Reilly said the final report into the overcharging, which is due to be released in September, would make strong recommendations for change.

“The vast majority of banking staff are people of honesty and integrity. If there are a few that don’t act in this manner, it gives a bad name to the whole system.”

He added that IFRSA would not be carrying out such a comprehensive investigation if it did not have some grounds to suggest a cover up.

Under new finance legislation introduced in the wake of the banking scandals, IFSRA has the power to fine a bank up to €5m for overcharging customers. It can also disqualify directors or managers and fine them up to €500,000.

AIB chief executive Michael Buckley previously refused to appear before the Dail’s Public Account Committee, which was investigation the overcharging scandal.

But at AIB’s Bankcentre in Ballsbridge in Dublin yesterday, he expressed his sincere apologies to the bank’s customers.

He said the bank had been ‘tearing up the floorboards’ to uncover any irregularities that existed.

“We will take whatever disciplinary action is appropriate (when the final IFSRA report is released).”

The AIB board reaffirmed its full support for Mr Buckley, who is due to retire in 2006. But it said that candidates from outside the company would be interviewed to replace him, contrary to the previous practice of only selecting from within AIB.

AIB chairman Dermot Gleeson said this did not reflect on the quality of top line management in the bank.

He added: “I want to say how sorry we are for the regrettable lapses and errors which occurred and how determined we are to put it right.”

The Revenue Commissioners are continuing an investigation into former senior AIB staff who allegedly evaded tax through offshore investment schemes.