Senior management at AIB ignored at least seven opportunities to rectify overcharging of foreign exchange transactions to customers despite a number of warnings from internal sources, according to the financial regulator.
IFSRA's report into overcharging for foreign exchange and illegal practices at AIB's investment management arm, AIBIM, exposes the bank's inadequate control systems and a culture of fear that prevented employees from raising their concerns up the line.
The report states that an internal memo written in 2002 calculated the potential cost of disclosing the overcharging which took place between 1998 and 2004 costing customers €34 million in fees. AIB also failed to notify the regulator of its efforts to correct the overcharging this year.
IFSRA chief executive Mr Liam Reilly said the practices unearthed by the report were "completely unacceptable", although he declined to name the executives involved as internal disciplinary proceedings are under way.
The report is also scathing of practices at AIBIM, highlighting a system of artificial deals to boost the performance of certain funds.
Referring to the Faldor investment fund operated by AIBIM on behalf of AIB's top management, the IFSRA investigation found no evidence that the executives were aware that the fund received preferred allocations of plum deals.
However, AIBIM did use its own funds to boost certain clients' portfolios other than those of Faldor. Between 1991 and 1993 eight deals worth €174,000 were diverted from client funds to boost the performance of others.
AIB's internal auditors failed to identify this violation of dealing rules and ignored the questionable dealing of Faldor.
AIBIM has since compensated the clients who lost on the deals.
Mr O'Reilly said it was unlikely that all foreign exchange customers would be compensated because of the time which had elapsed and because many customers were tourists who had probably discarded their receipts.
However he insisted AIB would not benefit from any unrepaid money though he declined to say how that money might be disbursed.