Allied Irish Bank has been fined €2 million by the Central Bank - the largest fine in Irish retail banking history - after it was found to have overcharged customers.
The bank also failed to introduce proper systems to notify them of the irregularities and to issue refunds on a timely basis.
The Central Bank also expressed concern that some of the State’s financial institutions “continue to experience control failures that result in customers being overcharged and that the timeframe for the resolution of these errors and making restitution to customers can be unduly drawn out at times”.
It said AIB had been in breach of the Consumer Protection Code, which outlines how all banks must deal with consumers, over several years and had breached the code in three distinct ways.
It found that there had been an unacceptable delay in notifying customers of overcharging and issuing refunds and that the bank did not have in place adequate systems and controls to ensure compliance with the code when it came to informing customers about refunds due.
It also said the bank had failed to ensure that customers who bought credit card payment protection insurance but subsequently changed their minds were not charged fees.
“These failures to prioritise and direct adequate resources to the rectification of the issues identified has resulted in undue delays in restitution to affected customers,” the Central Bank said.
It said AIB had failed to put in place “robust governance arrangements specifically by failing to have adequate internal control mechanisms to prevent and rectify frequent and many instances of overcharging”.
According to the Central Bank, most of the affected customers have been refunded with appropriate interest and the bank had “undertaken to repay, with appropriate interest, all those outstanding amounts that have not already been repaid”.
It said the fine reflected the numbers of errors involved, the amount of money involved and the number of consumers affected by the errors over an extended period of time.
NCB Stockbrokers was also fined €100,000 and reprimanded as a result of incorrect reporting of some of trading activities.
The Central Bank said the breaches were unintended and added that once the firm became aware of the, they quickly undertook remedial steps, and submitted all transaction reports correctly. “The penalties imposed in this case reflect the firm’s proactive conduct, full cooperation during the course of the investigation and settling at an early stage in the administrative sanctions procedure.”
