AIB overcharging – Bank must repay money to customers

The pathetic attempt by executives of Allied Irish Bank to shrug off responsibility for the scandalous €14 million foreign exchange rip-off by deflecting blame to junior staff is almost as outrageous as the deception itself.

It is unacceptable to expect people, and especially the victims of this gross delinquent conduct, to believe that for eight years the top management of the bank was oblivious to what was happening.

To assert that was the case is to admit that internal standards of accountability, responsibility and fundamental business practices are abysmally defective. To blame it on a software problem they were unaware of, is totally spurious.

For a period of eight years the bank acquired €14m and but for an anonymous phone call to the Irish Financial Services Regulatory Authority (IFSRA), the practice might still be going on.

Once the overcharging scandal emerged into the public domain, one of the first reactions was a complete denial that senior management were aware of it, despite the fact it was conceded the problem was known about at departmental level two-and-a-half years ago.

In a breathtaking understatement, AIB’s chief executive, Michael Buckley, described eight years of accumulating €14m by illegally overcharging some foreign exchange customers as an “administrative cock-up”.

The bank would not have been so incredibly lethargic had the “cock-up” been to the advantage of the customers, and it most certainly would have been detected long before it reached such a phenomenal level.

Obviously, the spectre of John Rusnak, the Allfirst dealer who cost AIB $690 million a few short years ago, has dissipated and with it the lessons the bank should have learned.

Extraordinarily, there are no legal sanctions which can be applied to AIB for extracting so much money from its customers without their knowledge and consent.

Although the bank was in breach of the Consumer Credit Act, no prosecution will follow because, inexplicably, the relevant section does not provide for any sanctions.

Despite the fact that the Irish banking sector has been dammed by previous scandals, it beggars belief that something on the scale of this latest AIB transgression can still be perpetrated and the consequences are merely embarrassment and the issue of an apology.

Inevitably, there were calls yesterday for legislation to be put in place to prevent anything like it happening again, although from past experience effective laws should already have been in place to comprehensively police our financial institutions.

While the IFSRA has instigated an investigation into the debacle and demanded that the AIB catalogue how it happened, it is crucial that the bank be subjected to rigorous independent scrutiny.

In promising to reimburse affected customers, the AIB is only too well aware that this is an impossible task, but it cannot be allowed to profit from its deception.

Any overcharged customers who can be identified will have to be reimbursed with interest.

As has been suggested, the rest of the money could be lodged in the Government’s dormant account fund for distribution to deserving causes, along with a substantial contribution from the AIB’s own funds.