Statement 8 February 2010
As required under the Financial Regulator’s statutory Consumer Protection Code, AIB has reported an error to the Financial Regulator that occurred in the classification of the accounts of some customers.
The details of the charging error are as follows:
- Incorrect classification of some accounts that determine the fees/charges and interest to be paid on the account that differ for both personal and business customers’ accounts.
- Those accounts that were incorrectly classified resulted in some personal accounts being classified as business customers and some business accounts being classified as personal accounts, resulting in incorrect fees/charges and interest being applied to customer accounts in certain cases.
AIB estimate that 40,000 accounts may require refund with an estimated refund value of €4m plus compensatory interest. The average refund is expected to be €100. However until the full rectification process is complete, it is not possible to quantify the total number of accounts and potential refunds.
The Consumer Protection Code requires that firms speedily, efficiently and fairly correct charging errors and notify all affected customers. Following notification of this error, the Financial Regulator requested independent third party confirmation with regard to the undertaking of this project and feasible timelines for providing refunds. This work is being undertaken by KPMG. In light of this analysis, AIB have been directed by the Financial Regulator to communicate with all potentially impacted customers by 31 December 2010 and to complete the process and refund all accounts affected by 31 March 2011. The Financial Regulator continues to engage with AIB on this matter. AIB has carried out system changes to prevent this issue re-occurring.
AIB has commenced the process of communicating with customers on a phased basis advising them of the issue and setting out what is being done to rectify the matter. Refunds will be made to customers who have been overcharged due to the misclassification in accordance with the Consumer Protection Code and will include compensatory interest.
Any breach of a legislative provision or regulatory requirement, such as the Consumer Protection Code which was introduced in July 2007, which gives rise to a charging or pricing error may be considered under the Administrative Sanctions Procedure. Firms that do not discharge their responsibilities under direction may also be subject to administrative sanctions procedures.