16.7m refund to BOI customers
Bank of Ireland has refunded €16.7m to customers it underpaid when refunding them in relation to their Payment Protection Insurance policies. By Frank Connolly
The Bank of Ireland has yet to complete the process of refunding €18m to customers whom it said it overcharged in the administration of Payment Protection Insurance (PPI) policies.
In April 2005 the bank confirmed that it had underpaid 65,000 customers in refunds given to them under the PPI scheme. An investigation by the bank found that customers who repaid loans early did not receive refunds they were due or did not get the full amount due to them.
In May 2006 the bank said that it had sent out refunds totaling €16.7m to the customers owed money, but have not yet been able to confirm whether the cheques were received and cashed in every case.
A spokesperson for the bank said that it would not be able to finally confirm how many customers were refunded until May 2007. She said the bank accepts that a number of customers will not be traceable at this stage but that any monies not recouped will be given to charity. If a customer comes back later for a refund that has already been given to charity, he or she will be repaid from bank revenues.
The value of cheques not cashed by May 2007 will be given to the Community Foundation Ireland, an endowment fund that dispenses money to various voluntary and community groups across Ireland, and to the bank staff's third-world fund.
“We expect in the region of €600,000 will be paid between the Community Foundation of Ireland and the third-world fund that staff contribute to. This is based on instances where refunds issued did not reach the customer.” The Financial Regulator was notified of the chosen charities, the Bank of Ireland spokesperson said.
“The organisations were chosen on the basis that no publicity would accrue to Bank of Ireland and that the decision on the ultimate beneficiaries of the money would be made independently of the bank,” they added.
As reported in Village (4-11 January), the same charity, Community Foundation Ireland, has already received €12m from monies owed by AIB to customers it admitted to overcharging in 2004 and whom it could not trace. The charity is expected to receive a further €20.5m from AIB when the bank pays out funds it overcharged customers whom it is has been unable to trace. The bank announced in September 2006 that it intended to give €20.5m to charity, but earlier this month told Village that it had not yet completed the process and could not confirm which charities had benefited from the unclaimed overcharging funds.
AIB has said that it overcharged customers over €65.8m in foreign exchange services, lease contracts and stamp duty applied to ATM cards in the late-1980s and 1990s.
A spokesperson for the Financial Regulator confirmed that it has agreed with both Bank of Ireland and AIB that it could give the unpaid refunds to charity as long as neither financial institution benefited from the process.
The regulator said that it had established a set of principles to deal with financial institutions that have overcharged customers. They have agreed that the institution responsible for overcharging should “make all reasonable efforts to effect a refund (with appropriate interest) to all customers who have been affected by the charging issues”.