Inquiry into misreporting by lenders extended

THE DATA Protection Commissioner will extend its investigation into the misreporting of customer arrears details by AIB to see how it and the other main Irish lenders reported restructured loan cases to the Irish Credit Bureau (ICB).

Deputy commissioner Gary Davis said AIB may have misreported arrears details for another 5,000 customers who were in financial difficulty and had their loans restructured to allow them to make some form of repayments.

An AIB spokeswoman said the bank is undertaking a full review of all reporting to the ICB. “Until we have completed this exercise we cannot definitively say that no further customers have been impacted,” she said. “We are taking this matter extremely seriously and we will continue to consult with the Data Protection Commissioner and ICB as we progress through this work.”

This week the bank admitted up to 12,000 customers had been affected by incorrect reporting of missed repayments by customers, which made their credit records look worse than they actually were.

The commissioner’s office would also examine the reporting of restructured loan cases to the ICB by the other major banks and credit unions, said Mr Davis.

The number of restructured loans and arrears cases has risen sharply as the weak economic environment has left customers struggling to repay debts.

The commissioner intends to widen its investigation into the reporting of arrears cases by AIB to the other major Irish banks and the country’s largest credit unions.

Mr Davis said the commissioner would start examining the reporting to the ICB by Bank of Ireland, Permanent TSB, Ulster Bank and the credit unions next month.

“We are going to have to go broader because there is no reason to believe that if the error happened at AIB, then it could not have occurred elsewhere,” he said.

AIB admitted on Wednesday that it had sent incorrect details on customers which could have affected their ability to secure new loans elsewhere. The bank apologies to 12,000 affected customers.

The bank had been supplying incorrect data to the ICB for six years. Where a customer missed repayments on a loan for one or two weeks, AIB had reported these as a missed monthly repayment.

More than 140 lenders check an individual’s credit and repayment record at the bureau before deciding whether to lend to them.

Mr Davis said four missed weekly payments would not have had any negative effect on a person’s credit record, whereas several missed monthly repayments would be very damaging.

“This shows that bank errors can have huge consequences for customers,” he said.

Mr Davis said the commissioner would also look at how other banks have been reporting restructured loan cases to the ICB.

“There seems to be a lack of consistency on how financial institutions were reporting restructured loans to the Irish Credit Bureau,” he said, while noting the pressure financial institutions have been under to cope with arrears cases.

AIB had said it will pay for the cost of customers’ reports for the ICB but is carrying out a case-by-case review on whether customers could not secure new loans.

A Bank of Ireland spokesman said the bank has not supplied incorrect information to the bureau but is reviewing its reports.

A spokesman for Permanent TSB said the bank reviews its reporting systems regularly and that no issues had been identified.