KBC Ireland offers ‘goodwill’ payments of up to €75 to former savers for breach

KBC Bank Ireland has decided to offer “goodwill” payments of as much as €75 to certain former savers, after the lender was found by the Financial Services and Pensions Ombudsman (FSPO) last year to have breached consumer protection codes by not directly communicating rate changes.

The FSPO decision was based on a complaint lodged by an individual customer. It was upheld by the High Court in May, after KBC Bank Ireland appealed the ombudsman’s finding.

That customer was awarded €75.47 by the ombudsman, equating to the difference between the interest paid during the lifetime of the account and the income received based off his initial 0.3 per cent rate.

The customer was also awarded €1,000 in compensation for the inconvenience involved in making a number of lengthy submissions as he pursued his complaint through the FSPO.

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A spokeswoman for KBC Bank Ireland said the bank has written to an unspecified number of former variable rate deposit account customers after subsequently reviewing how it notified them of rate changes between 2019 and 2022.

It had notified the savers of rate changes through advertisements in the national press, on its website, through its digital app and in annual statements to customers, but did not inform them directly.

“Following the review, the bank concluded that the channels used, while in line with the terms and conditions of the account, may not have been of the standard expected or fully comply with the Consumer Protection Code in respect to these rate change communications and should have been accompanied by a direct communication to customers in advance of the rate changes,” she said.

[ KBC freezes final 143 Irish current accounts as last services end ]

“KBC Bank Ireland has written to customers affected and included in this letter a one-off goodwill payment cheque of up to €75 based on deposit balances. We would like to acknowledge our failure to communicate more extensively and apologise for any potential inconvenience caused.”

KBC Bank Ireland, which sold its remaining €1.8 billion deposit book to Bank of Ireland earlier this year and froze outstanding current accounts in August as part of its retreat from the Irish market, will be making the payments by cheque.

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Mr Justice Anthony Barr of the High Court rules in May that the FSPO was entitled to take “a common sense” approach as to whether the bank had breached the Central Bank’s Consumer Protection Code, 2015 edition, by behaving in a way that was deemed to be “unreasonable and unproper”.

However, the ruling shot down the FSPO’s contention that KBC Bank Ireland had acted in breach of contract.

“While [KBC Bank Ireland’s] appeal has been successful under the first ground of appeal, against the finding by the respondent (FSPO) that it acted in breach of contract, the court is satisfied that the overall decision of the respondent is not vitiated by that error,” Mr Justice Barr said.