Tuesday 30 May 2017

AIB 'trying to confuse' its variable rate customers

Charlie Weston Personal Finance Editor

AIB has been accused of trying to confuse customers with offers to give them no-fee banking.

Taxpayer-owned AIB said it would waive fees on accounts from which a mortgage is paid by direct debit.

This will start immediately for new home mortgage drawdowns, and be available to existing eligible home mortgage customers from December.

The benefit will be automatically applied to the personal current account used for the mortgage repayment.

Account fees can cost up to €120 a year. The bank brought in, and gradually increased, bank charges soon after it was bailed out by taxpayers.

But consumer advocate Brendan Burgess said AIB's variable rate mortgages were still too expensive, and the bank was trying to confuse customers instead of cutting rates.

He said despite the bank reducing variable rates on three occasions in the past 10 months in an effort to lure mortgage customers, it was still charging too much to its 150,000 variable rate mortgage holders.

Variable mortgage rates here are a multiple of those charged in the rest of the eurozone.

The bank, which was bailed out by taxpayers at a cost of €21bn, is to reduce its variable rates by up to 0.25pc on October 1, and has the lowest variable rate. But Mr Burgess said there was still scope for more cuts.

He said that customers who do not have a mortgage with the bank would now be subsidising those who have one.

Current accounts were costly to provide - and cutting the fees on them should not be used to favour one set of customers over another.

"This is part of an overall plan by all banks to confuse consumers, whether it is free current accounts, 2pc of the value of the mortgage back from Bank of Ireland, or paying for legal costs for a mortgage.

"I would prefer to see better long-term value for customers by cutting variable mortgage costs."

David Hall of the Irish Mortgage Holders Organisation said mortgage holders would be wise to keep their current account and mortgage account with separate banks.

Irish Independent

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