Watchdogs worry over fees rise as bank says clients will not suffer

AIB's estimated 1.5 million business and personal banking customers in Ireland would not suffer any financial loss as a result of the Allfirst fraud, a bank spokesman said yesterday. The spokesman said the after- tax loss of €596 million (£469.3 million) incurred in the US would be "written off" from the AIB Group's 2001 accounts and, while efforts would be made to recoup losses, Irish customers would not be targeted.

"That issue won't have any knock-on effect for the customer," he said. The possibility of recovering losses by imposing higher or additional bank charges at home was not under consideration, he said. Equally, he said, the sale of bank buildings was not viewed as an option.

"We've taken a hit for 2001 as a result of it, but that won't feed on," he said.

The potential for increased banking charges is of concern to the Consumers Association of Ireland, however. Chief executive, Mr Dermot Jewell, said yesterday that, while it was too early to speculate on how the bank would attempt to make good losses caused by the US fraud, consumers should not be left to bear the ultimate financial burden.

"There are not going to be many who won't be of the view that the consumer will bear the brunt of this," he said. "It's always the consumer who pays."

Under the Consumer Credit Act 1995, all charges imposed by Irish banks must be notified to the Director of Consumer Affairs, Ms Carmel Foley, and this notification must be accompanied by "a statement of the commercial justification for the proposal including a detailed statement of cost". Should AIB consider imposing new or additional charges on its customers following the fraud, it would have to go through this process.

"It's not something they could do unilaterally," said Ms Foley yesterday. "It doesn't seem to me initially that there's any importance or concern for my office."

The director said her office had thus far received no inquiries from the public on AIB, and welcomed the earlier assurance from the Taoiseach, Mr Ahern, that customers in the Republic were in no danger of losing funds as a result of the fraud.

Mr Jewell said he took comfort from the director's role in the area of charges, but expressed concern that, rather than increasing existing fees and charges, the bank would introduce levies in a new area. Charging a fee for AIB customers to use other banks' ATMs could, in theory, be an example of this. The possibility of raising interest rates on mortgages or credit cards, areas over which Ms Foley has no remit, could be another option.

Ms Foley said competition issues would make such a move unlikely.

Mr Jewell yesterday urged consumers to be aware of all banking fees or charges imposed on their accounts.