State-owned Allied Irish Banks is repaying €3.1 million to 11,500 customers over discrepancies on optional insurance products sold with credit cards following an investigation into complaints made by customers last year.
The refunds, amounting to an average of €270 per customer, are being notified in letters from the bank. AIB apologised to customers in a statement yesterday.
The bank said the Central Bank had been made aware of the matter and acknowledged that the regulator was conducting a review into the sale of payment protection insurance which covered this.
The discrepancies related to failures to validate information provided by customers when they applied for new credit cards.
AIB found that the bank had incorrectly charged customers for payment protection, travel insurance and card protection when customers provided contradictory information on application forms.
The bank had failed to check with customers who had mistakenly accepted and declined payment protection, travel insurance or card protection when applying for a new card.
AIB also failed to check with customers when they provided contradictory information on their employment status.
The bank said that customers whose credit card accounts were in arrears from June 2009 were advised that their payment protection policy would be cancelled following two consecutive missed payments.
Unless the customer missed a third consecutive payment, the policy was not cancelled and the customer continued to be insured.
In December 2010 AIB was fined €2 million by the Central Bank – the largest fine imposed in Irish retail banking history – after the bank was found to have overcharged significant numbers of customers over a period of years.
The Central Bank noted at the time that AIB had, among other issues, failed to ensure that customers who bought payment protection insurance on credit cards but subsequently changed their minds were not charged fees.
In an unrelated development, AIB announced the retirement of the head of corporate institutional and commercial banking Jerry McCrohan after 43 years working with the bank.
AIB chief executive David Duffy said he would name Mr McCrohan's successor in the coming weeks following approval by the Central Bank under its fitness and probity rules.
Mr McCrohan was moved from head of corporate banking to run the capital markets division in early 2010 by AIB's then managing director Colm Doherty.
Later that year, under AIB's new chairman David Hodgkinson, Mr McCrohan agreed to remain on past retirement age and take up his existing role to restructure the corporate banking division.
