70,000 charged €8.1m extra in 24 areas

AIB consumer issues: The AIB investigation has uncovered 24 new areas where 70,000 customers were overcharged a total of €8.1 million.

This is in addition to the foreign exchange overcharging of €25.6 million which sparked the investigation.

AIB has promised to identify customers who have been overcharged in all areas and refund them with interest "as swiftly as possible". The bank has established a customer helpline on 1800 787 564.

Of the 24 new areas, eight involve amounts of more than €75,000, including 4,200 mortgage customers who did not receive the proper interest rate discount.

Others affected include holders of personal chequebook accounts, savings customers and businesses.

In terms of the foreign exchange issue, AIB has installed software that it said would automatically repay around half of the foreign exchange transactions where customers were charged more than the 0.5 per cent margin that it had notified to the regulator.

These customers will receive their payments from August onwards. The value of these transactions is estimated to account for 70 per cent of the total €25.6 million value of foreign exchange transactions affected.

AIB has put in place a team to match further customers to specific transactions and will undertake an advertising campaign to encourage customers to come forward. However, it said customers who undertook 10 per cent of the value of the transactions would be difficult to identify.

The Irish Financial Services Regulatory Authority (IFSRA) has agreed to return to the bank this 10 per cent from its "good faith" deposit once 90 per cent of the value is paid back or after two years.

It will make a final decision on whether to return this money to AIB once it is satisfied that its internal systems for identifying customers affected has been rigorous.

Between September 1995 and the end of April 2004, AIB charged customers double the commission rate on foreign exchange transactions that it had notified to the Director of Consumer Affairs. All banks are obliged to notify certain charges to the director under Section 149 of the Consumer Credit Act 1995. Other notification breaches identified amount to €0.5 million, including interest, and affected 14,500 customers.

In addition, a total of €8.1 million is to be repaid to around 70,000 customers who were charged more than the agreed or advertised rate in 24 categories. AIB is required by law to repay this amount.

It is expected that all of these customers will be identified and refunded, and that these refunds will begin shortly.

In the largest single non-regulated category where mistakes were made, 4,200 AIB mortgage customers were not given discounts that they should have been awarded. This overcharging amounted to €3.6 million.

As had already emerged, some 34,000 students and graduates were not given advertised discounts worth a total of €1.4 million, while 24,000 customers were wrongly charged a total of €600,000 when their overdraft limits were amended.

AIB chief executive Mr Michael Buckley said only 4 per cent of its 1.5 million customers had been affected by the overcharging on non-regulated charges over an eight-year period.

"You cannot call that a culture of overcharging," he said.

AIB denied that the notification breaches on regulated charges constituted "overcharging", as this word referred to situations where consumers are charged over and above the advertised or agreed rate or the rate charged by competitors in the market.

Under contract law, the consumer does not have the right to claim this money back, IFSRA's chief executive, Mr Liam O'Reilly, confirmed.

However, Mr O'Reilly said new legislation - the Central Bank and Financial Services Authority Act, 2004 - will provide much better protection for consumers.

IFSRA's consumer director, Ms Mary O'Dea, said that a new programme of on-site inspections would check that the bank's central controls to prevent overcharging were up to scratch.