AIB to refund 110,000 credit card insurance customers
Published 20/08/2015 | 02:30
Thousands of AIB customers are in line for refunds after the bank was found to have sold customers an insurance product they did not need.
Some 110,000 customers bought credit card protection insurance and may be due a payout of up to €128 each.
The Central Bank said AIB has launched a voluntary redress scheme and would now write to the customers.
AIB says customers may have been provided with insufficient information when they bought the product, meaning they were paying for an element of cover for unauthorised or fraudulent use that the bank was already covering on the cards.
The refunds scheme relates to customers who bought card protection insurance that was provided by Pinnacle Insurance, trading as Cardif Pinnacle, from AIB.
This was bought between Aug- ust 2006 and 2014. The annual premiums typically cost €16.
Experts said that a bank customer who took out a policy in 2006 and held it until 2014 may be entitled to a refund of as much as €128. It is expected the average claim will be €66.
AIB could end up paying out more than €7m.
However, the take-up of redress schemes is often low.
The Central Bank said the scheme has been put in place because an element of the card protection product that covered unauthorised or fraudulent use was not required.
Customers were already covered for amounts greater than €75 under the terms and conditions of their credit card.
The Central Bank said the potential liability may have been "overstated in advertising and/or printed materials" which may have influenced customers to buy the insurance when it was not perhaps needed.
All customers impacted will be given the opportunity to claim a refund of the premiums paid.
Bernard Sheridan, the director of consumer affairs at the Central Bank, said: "We require all firms to make full disclosure to consumers of all relevant material information when selling any financial product.
"It is important that consumers can have confidence that firms are acting in their best interests and that they are not sold any cover which they do not need.
"Where this has occurred, it is our priority to ensure that consumers receive full redress. We encourage all affected consumers to make a claim."
The Central Bank said that if consumers do not receive a letter from AIB by September 30, but think they have been affected, they should contact the bank directly.
"AIB is writing to all eligible policy-holders and providing the opportunity to claim a refund of premiums paid from the 1st of August 2006," the bank said.
"Customer letters will be issued from the end of August to the end of September."