Inquiry finds bank overcharging

Bank customers may be due refunds after regulators uncovered errors and "misleading" advertising that led to overcharging at six Irish banks.

The issues were identified during a Central Bank investigation into homeloan and deposit products that offered promotional interest rates.

The inspection reviewed 200 customer and 40 complaint files were as part of the inspection.

Several of the homeloan products revealed errors, with some customers not getting the full 365-day period at the promotional or discounted rate. The Central Bank said IT systems at the banks were partly to blame for these errors.

More than 112,000 people took out one of the products investigated but the number who were overcharged has not been released.

One bank is currently conducting an investigation into the issue, while another has already begun issuing refunds to customers.

The Central Bank found fixed-rate homeloan customers were affected by the issue.

The regulators described some advertising material for deposit products as "unfair and misleading to customers", particularly in relation to one, unidentified, product.

"The brochures advertised an attractive equivalent annual rate, and information relating to the minimum rate payable, which should have been highlighted, was not clearly presented to the customer.

“Within nine months of issuing the brochure, the rate payable on the account was the minimum rate," the Central Bank said.

"The relevant bank is now in the process of recalculating the interest for each customer as if they had received the advertised rate for the entire year, and refunds will be made."

Regulators have also requested banks review their retention policies for application forms, after two institutions had difficulty locating signed forms for loans and deposit products during the inspection.