Refunds to BoI credit card clients will cost bank €1m
MORE than 1,500 credit card customers of Bank of Ireland have been refunded an average of €660 each after problems with payment insurance on their credit card accounts were uncovered.
The bank claimed last night it had discovered the problem after an internal review. The total cost of the refunds is understood to be €1m.
It is just the latest in a string of overcharging scandals at Irish banks.
Bank of Ireland said that those getting a refund had selected payment protection insurance on their credit cards, but would not have been able to get a payout if they made a claim.
This is because these people worked for themselves or were not working at the time, and would not be eligible for a payout under the terms of the insurance.
Bank of Ireland's payment protection insurance pays out up to €15,000 if the holder dies or suffers serious injury. Up to 10pc of the monthly repayments on a credit card are covered for those who lose their jobs.
The bank said last night it had issued refunds to 1,514 credit card payment protection customers.
"Following an internal review Bank of Ireland Insurance Services identified that some customers who self-selected payment protection insurance cover when applying for a credit card were not working at the time and were ineligible for cover," the bank said.
It said the internal review that uncovered the issue was conducted in parallel with the current Central Bank's probe of payment protection.
Last month, state-owned Allied Irish Banks said it was repaying €3.1m to 11,500 customers over problems with insurance sold with its credit cards following an investigation into complaints made by customers last year.
The refunds amount to an average of €270 per customer. AIB apologised to customers in a statement.
The bank said the Central Bank had been made aware of the matter and acknowledged that the regulator was conducting a review into the sale of payment protection insurance which covered this.
Thousands of customers of a variety of banks who were erroneously sold payment protection insurance are now expected to win millions of euro in compensation as a result of the Central Bank probe.
The Central Bank investigation is concentrating on the mis-selling of payment protection insurance to the self-employed, those close to retirement, and those on contract -- most of these were ineligible to be insured under such policies.
The investigation by the Central Bank's director of consumer protection, Bernard Sheridan, is understood to have uncovered widespread abuse across seven separate financial institutions.
The main years under investigation are 2008, when close to 140,000 protection policies were sold, and 2009-2011, when a further 136,000 were sold.
The mis-selling of payment protection has been a massive scandal in Britain.
British banks have set aside over £5.5bn (€6.6bn) to compensate British customers who were wrongly sold payment protection insurance.
It was found that the vast majority of PPI policies were mis-sold.