The Financial Regulator is to review how it deals with overcharging by financial institutions under the Consumer Protection Code. It said it was looking at strengthening its approach to how quickly firms resolved such issues.
The head of financial regulation Matthew Elderfield said it was clear from recent cases that change was needed in how firms handled issues of charging and prices.
'It is also apparent that the current approach to enforcement falls short of what is required to provide a strong incentive for faster responses and better practice in the first place,' he added.
Mr Elderfield said he was concerned that firms were continuing to experience failures which led to overcharging of customers. He added that it was 'disappointing' that the process of resolving errors and repaying consumers could be so drawn out.
His statement came after AIB said it had identified an error in relation to the classification of some customers' accounts, which resulted in incorrect charges being applied.
AIB says that some personal accounts may have been classified as business and some business accounts as personal and this error could have resulted in incorrect fees and charges and/or interest being applied to customer accounts.
It added that the incorrect classification may have arisen over a number of years and the bank estimates that the number of accounts requiring a refund amount to 40,000. It says the total refund would be €4m plus compensatory interest. This means that average refund is expected to be about €100.
In a statement, AIB said that it informed the Financial Regulator of the incorrect charges when the issue was identified in November 2008. It said that at the request of the regulator, independent assurance is being provided by KPMG and a process is underway to identify the accounts which might be affected.
AIB has begun writing to potentially impacted customers and says it will contract all affected customers before the end of the year to make them aware of the issue, apologise and inform them of the steps the bank is taking to fix the matter,
AIB says it will not be recouping any fees and interest which have been underpaid.
New chief financial officer named
AIB said it has appointed Bernard Byrne as its chief financial officer.
Mr Byrne is currently the group financial and commercial director of the ESB and will take up his new position in May. He will also become a member of the bank's group executive committee.
'Bernard brings with him a wide range of experience in the financial management of both domestic and internationally focussed organisations. His experience includes the financial management of operations in Ireland, the UK, Poland and the US - all of which are also significant AIB locations,' commented Colm Doherty, AIB's group managing director.
