AIB issues alert over credit card protection scheme
ALLIED IRISH Bank has sent letters this week to hundreds of its credit card customers alerting them to possible problems related to the payment protection insurance policies the bank sold to them in connection with their credit cards.
The bank confirmed that, following a review of its payment protection policy sales, it had uncovered some “inconstancies” in the sale of the controversial policies, although a spokeswoman declined to elaborate on the nature of the inconsistencies.
In the letter the bank told customers that following the review “we have identified instances where the documentation held by us is not consistent with the application of payment protection to your account.
“As a result of this we require your confirmation to determine whether or not it was your intention to purchase payment protection at the time of opening your credit card account.”
Customers are advised that if they wish to keep their insurance they do not have to contact the bank but if they have concerns or did not wish to have insurance they need to contact the bank.
One customer who was sold a payment protection policy seven years ago said he had not been aware he had taken out the policy and when he contacted the bank yesterday he was told his case would be investigated and AIB would contact him within two weeks to outline how it planned to proceed.
The AIB spokeswoman said she was not in a position to discuss whether or not people would be issued with refunds and said the review was ongoing.
Payment protection policies ostensibly offer to clear outstanding debts on credit cards in the event that card holders fall sick or lose their jobs and are unable to cover their debts. They have been dogged with controversy in the UK in recent years after widespread mis-selling was uncovered and millions of consumers were issued with billions in refunds.
The customers in question were mis-sold the expensive and frequently useless insurance policies, which were hugely profitable for the banks. The policies were taken out to insure repayments on loans, mortgages and credit cards.
Banks there sold policies to the self-employed and failed to inform them that they would never be able to claim against becoming unemployed; or those who fell ill as a result of a pre-existing condition, which invalidated their insurance. In some cases customers were denied loans or mortgages unless they took out payment protection insurance. Customers were frequently unaware that they were paying for them.
A investigation by the Competition Commission in 2008 found that for every £100 received in premiums for payment protection insurance, just £15 was paid out to cover claims. This compares with £78 paid out in car insurance and £54 in home insurance.