Thursday 22 February 2018

Overcharging AIB fined but taxpayer to foot bill

Charlie Weston Personal Finance Editor

STATE-rescued bank AIB, which has been repeatedly found to have been overcharging customers, has been hit with a record €2m fine over its failure to deal fairly with customers who were charged too much.

It is the largest fine ever slapped on a retail bank in this country. But the money to pay the fine will have to come from taxpayers who are bailing out the crisis-hit lender.

The Cental Bank reprimanded AIB and warned that it now had additional legal powers which it would not hesitate to use to clamp down on overcharging banks.

Some 265,000 customer accounts have had to be refunded by AIB in relation to overcharging issues in the 1990s.

Central Bank officials said yesterday that AIB was guilty of an "unacceptable delay" in notifying customers of overcharging issues and repaying them.

The Central Bank also said AIB had failed to have adequate systems and controls in place to deal with overcharging.

And it said AIB had failed to stop charging credit card customers for payment protection insurance, even when they had changed their minds about receiving the product.

AIB, which has a notoriously poor compliance record, denied yesterday that overcharging has been endemic at the bank over the past two decades.

A spokeswoman stressed that the overcharging errors were spotted by the bank itself.

"There is no suggestion of anything deliberate or endemic in this."

The spokeswoman admitted that the charging systems in the bank -- both manual and automated -- had been poor and stressed that huge work had gone into trying to improve its systems.

The fine related to the fact that customers lost out when they were charged for payment protection insurance on their credit cards even though they told the bank they did not want this added extra.

Ordinary bank customers also lost out when they were charged business rates for operating current accounts even though they should have been getting personal customer deals.


And some businesses were also wrongly regarded as being personal customers.

Central Bank staff would not comment yesterday about the wisdom of fining a bombed-out bank when the money to pay the fine will have to come from the taxpayer.

The €2m fine is not as large as the €3.2m fine imposed on Quinn Insurance over the failure to notify the regulator when it provided loans to related companies. But it is the largest fine ever imposed on a retail bank in this country.

And the Central Bank warned yesterday that it was now set to take a tougher line on errant banks. It published details of a new enforcement strategy, which is to be policed by director of enforcement at the Central Bank, Peter Oakes.

He warned that he would act to protect the best interests of consumers. "Regulated firms can expect increased enforcement activity, based upon our existing powers, new powers under the Central Bank Reform Act 2010 and additional enforcement powers proposed for 2011."

Meanwhile, the Central Bank has also fined NCB Stockbrokers €100,000 and reprimanded the firm. This was due to the incorrect reporting of some of its trading activities to the authorities.

The Central Bank said the breaches were unintended and that NCB quickly took action to deal with the issue.

Irish Independent

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