Allied Irish fined for overcharging
Published 21/12/2010 | 15:22
Allied Irish Banks has been fined two million euro for overcharging customers, the Central Bank has confirmed.
An investigation into the bank imposed the largest fine in Irish banking history after finding unacceptable delays in notifying customers of mistakes and in paying refunds.
It penalised AIB for three issues including failure to act with due skill, care and diligence in the best interest of its clients and failure to have adequate systems controls to ensure compliance with consumer rules.
It was also criticised for failing to ensure customers who changed their minds about buying credit card payment protection insurance were not subsequently charged.
"The breach of the regulations comprised of the firm failing, for a number of years, to have in place robust governance arrangements, specifically by failing to have adequate internal control mechanisms to prevent and rectify frequent and many instances of overcharging," the Central Bank said.
The report found most of the overcharging issues were historic.
"Most affected customers have been refunded with appropriate interest. The firm has undertaken to repay, with appropriate interest, all those outstanding amounts that have not already been repaid," it said.
It said the penalties imposed on AIB reflected the numbers of errors involved, the amount of money involved and the number of consumers affected.
The Central Bank said AIB had taken steps to resolve the issues but said it was concerned that financial institutions continue to experience control failures that result in customers being overcharged, and it said the length of time taken to make refunds was unduly drawn out at times.
The Central Bank called for firms to monitor and test internal control systems on a regular basis to reduce the potential for errors.