Sean FitzPatrick and his discredited management team at Anglo Irish Bank may have overcharged customers by as much as €100m on loans taken out between 1999 and 2004, which will now have to be paid back, with interest, by the taxpayer, the bank's chief executive Mike Aynsley has confirmed to the Sunday Independent.
While the exact figure due for repayment will not be known until an investigation into the matter is completed, Mr Aynsley said he was hopeful, however, that it would fall somewhere between €30m and €50m.
"We're thinking at this stage that it [the cost] is more likely to be in the €30m to €50m range. It's a lot of money but certainly not as big as the billions that we normally talk about in this bank," Mr Aynsley said.
Asked if the overcharging of customers was the only historical issue being looked at by the bank's new management, he said: "It's the only additional issue that we know about. We had one inquiry from a customer. Now it's an investigation because Jim Bradley, our new head of markets, started digging around and surfaced some other examples.
"Bear in mind when this happened, this was pre-2004. So this is a long time ago, so it's going to take us a little while to get to the bottom of the full scale, if there is a full scale. We don't think that this is a very widely spread thing. There might have been a few small pockets of it over time and then it sort of stopped so we suspect it was driven by some kind of process errors."
Asked if there was any evidence that the overcharging of customers had been deliberate, he said simply: "We don't know yet.
"There is a statute of limitations and, theoretically, we're probably not compelled to go back beyond a six-year period, but because we believe there are important ethical issues around this for us and our customers, we're doing it and we will compensate people accordingly."
In some cases, the compensation being given will be in the form of an offset of debts still owed to the bank by affected customers, Mr Aynsley explained.
"There are cases where we might owe someone money who has defaulted, or who still owes us a lot of money. Then it's a different matter. We'll just offset it against what they owe us. We won't be writing them a cheque," he added.
But even as the Anglo chief did his best to downplay the hit to the taxpayer, a Northern Ireland-based consultancy, which advises businesses and individuals who suspect they have been ripped off by the banks, claimed Anglo's estimates may be too low, saying that the true scale of overcharging at Anglo could be as high as €200m.
Consultancy BankCheck has already recovered some €15m for individual businessmen and businesses from financial institutions both sides of the Border because of overcharging. They claim that overcharging in Anglo began before 1999 and continued after July 2004.
Even before Mr Aynsley revealed two weeks ago that his new management team had uncovered evidence of overcharging, BankCheck's director Eddie Fitzpatrick had already initiated a number of separate claims to Anglo on behalf of customers who individually claim they were overcharged by tens of thousands of euro.
Mr Fitzpatrick said that Mr Aynsley's statement last week -- that the bank was now investigating incorrect interest rates involving differences of 0.03 per cent to 0.05 per cent between the rate stated on loan documents and the rate applied -- may not reflect the true scale of the overcharging.
"I firmly believe that these percentages are understated and in effect the rate is somewhere between 0.125 per cent and 0.25 per cent. If we assume that his figures are correct the actual amount is somewhere between €200m and €400m. Furthermore, I believe that this practice started before 1999 and certainly did not stop in 2004 as suggested by Anglo," Mr Fitzpatrick said.
Mr Aynsley's assertion that the statute of limitations could theoretically mean the bank might not be compelled to go back further than six years in compensating customers has been questioned by a legal source.
They pointed out that it is arguable that the time limit for the statute of limitations would begin to run from the moment accidental overcharging was discovered rather than when it started.
"In other words, if the errors or overcharging was spotted in the last couple of months the legal clock would start ticking from then. If the investigation being carried out by Anglo discovers that the policy of overcharging was deliberate then that is a different kettle of fish. There is no statute of limitations on fraud," the legal source said.