AIB could have been facing a fine of up to €5 million if the Government had moved to implement legislation to empower the Irish Financial Services Regulatory Authority (IFSRA) to fine and name and shame the bank for overcharging some customers by up to €14 million.
The final part of the legislative package granting statutory powers to the regulator is expected to be finalised by the end of June at the earliest. Opposition politicians have criticised the Government for thwarting the regulator's efforts to protect consumers as a result of the lengthy deliberations over the forthcoming legislation.
Yesterday, the Labour Party's spokeswoman on finance, Ms Joan Burton, accused the Minister for Finance, Mr McCreevy and the Tánaiste, Ms Harney, of "buck passing" and "hand wringing" in their response to the overcharging revelations.
Ms Bruton said that, while both Ministers were quick to criticise AIB at the weekend, both equally had failed to accept any responsibility to have an effective regulatory framework in place that would impose exemplary punishment on any financial institution for this kind of malpractice.
"The whole issue of financial regulation has been on the political agenda since 1998 and, even now, six years on, this Government has yet to finalise the passage of the full legislation package," she said. "Ministers McCreevy and Harney are directly to blame for these delays and indecision," she said.
Ms Burton has called on IFSRA to come before the Oireachtas Committee on Finance this week to explain precisely what remit they have in punishing AIB.
IFSRA does have the power to impose the ultimate sanction against a financial institution that is found to have breached regulations, that is to withdraw its operating licence. It views this as a "nuclear option" and has sought the inclusion of lesser sanctions in the new legislation to deal with various misdemeanours.
This has resulted in the Bill containing a provision that would allow IFSRA to issue fines of up to €5 million and grants the regulator the power to decide on the appropriate amount of the fine that should be applied to various financial institutions where breaches have occurred.
An IFSRA spokesman said it is too early to tell whether the regulator may require any further powers in the light of the current investigation at AIB. "If, during the process, we find anything that would suggest that, we will not be slow in seeking further powers," the spokesman said.
Meanwhile, AIB has received 735 calls from concerned customers since the overcharging was revealed last Thursday. IFSRA has received 400 calls.
