The Office of the Data Protection Commissioner has said AIB's misreporting to the Irish Credit Bureau amounted to a serious breach of data protection law, at the upper end of the scale.
Deputy Commissioner Gary Davis told RTÉ News that AIB had supplied inaccurate personal data to the ICB, which is a breach of data protection law.
As a result, he said, people who applied for credit may have been turned down, with serious consequences for the individuals concerned.
He said such people may not even know why their application was not approved.
Earlier, AIB confirmed it incorrectly reported missed loan repayments to the Irish Credit Bureau over a six year period until July of this year.
12,000 customers who missed scheduled weekly or fortnightly repayment schedules were impacted whereby the bank reported "the number of missed weekly or fortnightly payments rather than the number of equivalent months, as required by the ICB," a statement from the bank said.
Over 140 lending institutions register information with the ICB concerning customers' repayment record.
Mr Davis said the commission's initial focus has been on getting AIB to remedy the problem and this had turned out to be a far more lengthy process than envisaged, which had prompted the commission to convey its disappointment to AIB.
He said now the problems had been remedied, the commission has moved on to try to understand how this serious issue happened.
He said the commission is more broadly concerned that the issue may not be isolated to AIB and so is beginning a generalised audit of financial institutions.
He urged every effected customer to get a copy of their credit report to check if it was now accurate.
And he said where such people have had credit applications turned down in the last six years they may have grounds to resubmit their application.
The Irish Credit Bureau has said it has fully corrected all relevant customer records.
The ICB, which is owned by financial institutions including AIB, said it was first alerted to the problem six weeks ago by AIB.
Chief executive Seamus O Tighearnaigh said together the ICB and AIB have been working to deal with the problem.
He said the Data Protection Commissioner was informed and letters were sent to customers effected last weekend.
He said what happened was wrong and the ICB would now write to its other members to alert them.
The Central Bank is aware of the issue.
If impacted customers have queries, they should contact AIB at the helpline number provided in the letters to customers and make a complaint to AIB if necessary.
