AIB admits overcharging error, watchdog to review issue
AIB today revealed that the holders of some 40,000 accounts may be eligible for a refund after an “error in classification” resulted in overcharging estimated to total €4m.
Meanwhile the Financial Regulator has separately announced that it is to conduct a review of overcharging by Irish financial institutions saying the current approach to enforcement "falls short of what is required".
“As part of our ongoing review of our services and procedures, AIB has identified an error in relation to the classification of some customers’ accounts resulting in incorrect charges being applied,” the bank said in a statement.
It said it informed the Financial Regulator when the issue was identified in November 2008 and that a process is now underway to identify those who have been affected and to ensure they are fully reimbursed.
AIB said accounts that were incorrectly classified resulted in some personal accounts being classified as business customers and some business accounts being classified as personal accounts, resulting in incorrect fees/charges and interest being applied in certain cases.
AIB estimate that 40,000 accounts may require refunds with an estimated total value of €4m plus compensatory interest.
“The average refund is expected to be €100. However until the full rectification process is complete, it is not possible to quantify the total number of accounts and potential refunds.”
The bank said it was currently notifying all affected customers and at the request of the Financial Regulator had engaged a third party – KPMG – to oversee the provision of refunds.
AIB have been directed by the Financial Regulator to communicate with all potentially impacted customers by December 31 and to refund all accounts by March 31, 2011.
The bank said it had carried out system changes to prevent this issue re-occurring.
Separately, the Financial Regulator said today that it was conducting a review of its approach to how overcharging is dealt with under the Consumer Protection Code.
"It is clear from recent cases that change is needed in how firms handle charging and pricing issues," said Matthew Elderfield, head of the Financial Regulator's office.
Mr Elderfield said the Regulator was "concerned that financial institutions continue to experience control failures that result in customers being overcharged".
"While the complexity of cases vary, it is nevertheless disappointing for consumers that resolving errors and providing restitution can be so drawn out at times," Mr Elderfield said in a statement.
"It is also apparent that the current approach to enforcement falls short of what is required to provide a strong incentive for faster responses and better practice in the first place.
"The Financial Regulator is therefore conducting a review to strengthen its approach concerning the timeliness of resolving overcharging in firms and the grounds for enforcement actions against such failures."
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