PPI refunds cost banks 25m euros
Published 03/10/2013 | 13:26
Banks are being forced to pay back 25 million euro to customers wrongly sold payment protection plans.
An ongoing investigation into the insurance schemes has found one in five breached regulations.
The revelation came to light after the Central Bank ordered 11 financial institutions to review all their policies.
They are AIB, Bank of Ireland, Bank of Scotland, Danske Bank, EBS, GE Money, KBC Bank Ireland, MBNA, Permanenttsb, RaboDirect Bank Ireland and Ulster Bank.
Payment protection insurance (PPI) covers customers who cannot make repayments on loans or mortgages in the event of them having an accident, losing their jobs or becoming ill.
But thousands who are barred from making claims under the terms of the policies - including the self-employed, home-makers and part-time workers - were wrongly sold the insurance.
Lenders were ordered to carry out independent reviews of 350,000 policies, sold since July 2007.
The Central Bank said more than half have been reviewed to date, with one in five found to have been wrongly sold in breach of consumer protection regulations. Customers are to be reimbursed.
A deadline of the end of the year has been set for the completion of the investigation.
Bernard Sheridan, the Central Bank's director of consumer protection, said customers need confidence that they are being sold suitable products and services.
"Following our initial investigation, we have required firms to undertake a review of PPI sales since July 2007, overseen by independent third parties, to write to all affected customers, and to offer a refund or retention of their PPI policy," he said.