BoI branch in Galway faces investigation

The Bank of Ireland has initiated an inquiry into interest charging in a branch in Galway. It has also said it is unhappy with decisions which were taken in relation to the investment of funds lodged with the branch by some customers.

A note sent by the manager at Mainguard Street, Galway, to a member of staff in 1995 stated that the bank wished to see an increase of 0.5 per cent in interest income from grade 2 and grade 3 accounts. These are the personal accounts of "good" customers.

The existence of the note was brought to the attention of the bank by RTE last week. Meanwhile, a routine audit of the Galway branch had already been underway, according to Mr David Holden, head of group public affairs.

He said the audit had identified three accounts "which had interest rates on them which required explanation". This explanation had not yet been sought. It seemed that customers were being charged the interest rates shown on their statements. The question was whether the rates were the correct ones.

Following the note being brought to the bank's attention, the scope of the audit was broadened to "interest charging in general at the bank". The existence of such a note "is a matter of concern", Mr Holden said.

The bank has also discovered that the monies lodged at Mainguard Street were being put into "longer term investments than the customers took out". Mr Holden said the customer got exactly the product that the customer took out and that there was no risk to the customers' funds. The branch was managing the funds in such a way that they yielded a higher return to the branch, he said.

The funds would be put into longer term investments without the customer being told. "We have made it clear we don't favour this practice," Mr Holden said. The occurrence of the practice was "quite recent".

Mr Holden said the bank had been "subjected to an extraordinary level of scrutiny in the past number of weeks," with inquiries by the Director of Consumer Affairs and the Garda Fraud Squad and the bank itself. The matters concerning interest charging at Mainguard Street "is the first issue brought to our attention that has caused us concern".