Leadership

AIB admits to incorrectly classifying 40,000 accounts

08.02.2010
Allied Irish Banks (AIB) has admitted to an error that saw the accounts of an estimated 40,000 customers incorrectly classified, which resulted in incorrect charges being applied.

AIB is currently estimating that as many as 40,000 customers will now require a refund as a result of the error and that the total refund will be around the €4m mark, leaving the average customer refund at around €100.

AIB said its account classification process defines accounts as personal or business and determines the fees/charges and interest package to be applied. However, the bank said an element of the account classification process has been found to be vulnerable in some cases, which resulted in accounts being mistakenly entered into the wrong category. This means that some personal accounts may have been classified as business and some business accounts as personal.

The lender said this incorrect classification may have arisen over a number of years and could have resulted in incorrect fees and charges and/or interest being applied to customer accounts.

The bank said it has begun writing to potentially impacted customers, adding that it will contact all those affected before 31 December 2010 to make them aware of the issue, to apologise and to inform them of the steps it is taking to rectify the matter.

AIB said that any customer who has been overcharged as a result of being wrongly classified will be fully reimbursed including compensatory interest.

It also said that any customer who has been undercharged will have their account status changed to the correct classification, but that it will not be recouping the fees and/or interest which have been underpaid by those customers.

AIB said it discovered the error during an ongoing review of its services and procedures and that systems changes have now been made to prevent the error occurring again.

The bank said it had informed the Financial Regulator when the issue was identified in November 2008.

At the request of Regulator, independent assurance is being provided on the issue by KPMG and AIB said a process is now underway to identify the impacted accounts and to refund affected customers by 31 March 2011.