AIB offers refunds to 500 mortgage customers

AIB confirmed this morning it is offering a refund to more than 500 customers after a second incident of unauthorised customer charging was revealed.

A spokesman for the bank said it is offering refunds to customers who had payment-protection plans automatically provided when they obtained a top-up on their mortgage, without requesting them.

The spokesman said the issue arose when existing mortgage customers with payment protection, who sought a mortgage top-up, were automatically given payment protection on their new mortgage.

"We now want to confirm that this [payment protection] is in line with their intentions. We have identified all the specific cases involved, and a customer contact programme is in place to do this."

He said about a third of these customers had their addtional mortgages for over 12 months and had received a statement. No one had complained, he added.

"Should the customers tell us that they did not require Payment Protection for the extended loan, we will, of course, refund them immediately", he said.

The issue was first reported in the Tallaght Echopaper. According to the bank, the issue affects less than one per cent of its 100,000 mortgage customers. All those concerned recieved top-up mortgages since 2001.

The spokesman said the issue was discovered by the bank as part of "an extensive trawl of every aspect of pricing across our product range" following the revealation that AIB overcharged customers for foreign exchange transactions.

The spokesman refused to state whether any other irregularities had been uncovered. He said the bank remained on course to complete its investigating into foreign exchange overcharging by mid June.

The Irish Financial Services Regulatory Authority (IFSRA) said in a statement this morning a former Irish Comptroller and Auditor General, Lauri McDonnell, had been appointed to oversee an inquiry into the case, to be carried out by an external firm of forensic accountants.

"When the investigation is complete we shall review the evidence and AIB's response to it," IFSRA said. "We will also be reviewing the regulatory process to see if any changes are necessary as a result of all this."

The IFSRAconsumer director, Ms Mary O'Dea, and its chief executive, Mr Liam O'Reilly, are this morning appearing before the Oireachtas Joint Committee on Finance and the Public Service to discuss AIB's overcharging.