Former AIB internal auditor Eugene McErlean has said the Financial Regulator knew about overcharging by the bank in 2001, but had later given the false impression that it only became aware of it in 2004.
Mr McErlean told the Oireachtas Committee on Economic Regulatory Affairs that the Regulator had investigated the issue in 2002, but had failed to act to protect consumers.
He said that three years later, in 2005, the Regulator had failed to inform an Oireachtas inquiry about the investigation into the matter.
Mr McErlean was group internal auditor in AIB from 1997 until 2002.
He said the audit unit had reported a major overcharging of fees to customers in 2001 and the Central Bank had been given a copy of that audit report.
In a statement this evening AIB said: 'The issues referred to by Mr McErlean were fully reported by AIB to the relevant regulatory authorities at the time, fully investigated and fully addressed.'
The Financial Regulator has said it published a report in December 2004 into foreign exchange and other charging issues at AIB.
The regulator said any allegations that it would have withheld information relevant to its 2004 report were completely without foundation.
AIB had undertaken to hold a complete review of the issue and promised refunds would be made to customers.
Mr McErlean said the Regulator had issued a statement later in 2002, indicating that it had carried out a rigorous review of the overcharging issue.
Mr McErlean asked why that information had not been given to a Dáil committee, which investigated the same issue, three years later.
Goodbody 'illegal process' claim
Eugene McErlean also said he made the Financial Regulator aware that AIB subsidiary, Goodbody, had arranged for all of its purchases of AIB shares for clients to go through what he believed was an illegal process.
He said those purchases were done using a company on the island of Nevis in the Caribbean.
The company which was black-listed at the time by the financial community.
Mr McErlean said he believed that this was not legal, although Goodbody's had got a legal opinion which said it was.
He said that Patrick Neary, then deputy Regulator, was shocked when he told him.
'Many millions of euros' would have been involved in these share transactions.