Bank error means a £66 refund for each student
Ulster Bank is to refund a total of £1.05m to thousands of Northern Ireland student account holders who suffered from overcharging, it was confirmed today.
The bank said an error had been discovered during an internal review and that refunds averaging £66 per person plus compound interest would be paid out "in the next few months".
It is estimated that around 16,000 UK customers - the vast majority of them from Northern Ireland - will qualify for the payback.
Refunds will also go to 11,000 account holders resident in the Republic, who will get an average of €88 (£63) per person, again plus compound interest, which will cost the bank an additional £680,000.
Ulster Bank said the error applied to certain student current accounts which were opened before December 2005.
A spokesman said: "We wish to apologise to affected customers, and will be contacting these individuals to refund them in full over the next few months."
He said the bank had reported the matter to the Financial Services Authority in the UK and the Financial Regulator in the Republic.
Ulster Bank has also set up a dedicated freephone number to advise concerned customers, at 0800-092-9506.
The Consumer Council commended Ulster Bank for identifying the mistake and for taking action to issue refunds.
Spokeswoman Alison Laird said: "We welcome Ulster Bank's definitive action to identify this mistake and put steps in place to repay the customers affected. "The bank is demonstrating good customer practice by directly contacting the people involved, setting up a freephone number and informing the Consumer Council so that we can work in partnership with them to help reunite customers with their money.
"Incidents like this prove that it is important to check your statements and speak to your bank about anything you do not understand."
The overcharging occurred because the bank failed to apply concessionary student rates to thousands of accounts.
It is the second time in three months that Ulster Bank, which is owned by Royal Bank of Scotland, has had to admit to a systems failure. In August, it announced it was to begin repaying nearly £3m in overcharges on payment protection insurance where customers had repaid loans early. That error, too, was discovered in an internal review.
As a result of a complaint from the Consumer Council, the Competition Commission has been carrying out an investigation into the current account market in Northern Ireland.
Earlier this year, the commission spelled out remedies that all banks operating in Northern Ireland are obliged to implement by October next year.