Investigators examining AIB's overcharging of certain foreign exchange customers are to widen their inquiry to examine the bank's imposition of a whole range of charges to customers since 1996. The investigation, which is being led by former comptroller and auditor general Mr Lauri McDonnell, will now take up to six weeks longer than had been anticipated,with a report now expected before the end of July, writes Siobhán Creaton, Finance Correspondent
The main reason for the delay, according to an AIB statement, is that the investigation "will now cover all charges from 1996 which were notifiable to the regulator", significantly expanding its task. The investigation, which also involves investigating accountants from Deloittes, will now have to examine AIB's imposition of a whole range of charges and whether proper rates were levied on bank customers.
In its statement, AIB also clarified for the first time how the investigation will report. It said Mr McDonnell will issue three reports in quick succession that will be given to the bank's board of directors and to the Irish Financial Services Regulatory Authority (IFSRA).
The first will detail how many of AIB's foreign exchange customers were overcharged, by how much, and the amount of money they should receive in compensation.
IFSRA has already established that the bank overcharged some customers to the tune of €20 million, and that it should pay them a further €5 million in compensation. The bank has lodged €25 million at the Central Bank to be repaid to customers. AIB had originally estimated that the amount overcharged was €14 million.
The investigators are also to consider allegations that AIB bank branches systematically tampered with the exchange rates charged to some customers. This could result in further refunds and compensation payments to customers.
The bank's practice of automatically assigning payment protection policies to certain mortgage customers without their knowledge is also being examined.
Mr McDonnell's second report is expected to follow within days of the first and will present the reasons why these customers were overcharged and how this practice could have gone undetected in the bank for almost a decade.
The final report will comment on AIB's internal systems and controls. AIB said its board of directors would consider the reports and will "determine appropriate actions" in light of its conclusions. It will also consider any further regulatory findings and what requirements IFSRA may demand.
The Labour Party's finance spokeswoman, Ms Joan Burton, yesterday expressed concern at the delay in the completion of this investigation and said the widening of its terms of reference showed the scale of overcharging may have been more extensive than had been previously realised or admitted.
"I am also concerned about the implications of this announcement for the promised appearance by AIB officials before the Dáil Committee on Finance and the Public Service."
Ms Burton noted if the inquiry goes on until the end of July, bank officials may not appear before the committee until the autumn.
"This is not a satisfactory situation. AIB has been less than honest with the public and its customers, and information has been emerging in dribs and drabs."
Yesterday the committee's chairman, Mr Seán Fleming TD (FF), issued a fresh rebuke to AIB, saying its decision not to appear before it "speaks volumes" about its culture. In a letter to AIB chairman Mr Dermot Gleeson he noted that AIB had recognised, since at least mid-2001, that changes were needed in the culture and organisational practices of AIB.
The committee also mentioned that AIB has said that making these changes has been Mr Buckley's key objective. "However, it appears to the committee that recent events demonstrate that there continues to be difficulties in the culture and organisational practices of AIB," the committee's letter states.