Bank to pay back €12.5m in improperly charged fees

ReimbursementsNational Irish Bank is to reimburse a total of €12.5 million to customers who were improperly charged fees and interest.

The bank is currently in the process of making over 1,450 reimbursements with a total value of €1.9 million. But in light of findings by inspectors appointed by the High Court, a further €10.6 million will be refunded to customers in a second phase of its reimbursement programme due to start in September.

NIB has set up a helpline on 1850-946865 for concerned customers and former customers who wish to inform the bank of their current contact details. NIB said it could not validate a fifth of fee amendments made over 10 years, from 1988 to 1998.

The bank is to examine all customer accounts where fee or interest amendments were made manually during this period. If it cannot find records validating the amendments, the customer will be reimbursed the amount plus interest. Customers who were charged less than €13 as part of a manual fee amendment will be automatically reimbursed, in order to speed up the process, regardless of whether or not documentation to support the changes exists.

The bank will donate any money left over from the €10.6 million fund once all reimbursements have been made to the Community Foundation for Ireland, a charity that gives grants to local voluntary groups.

The Irish Financial Services Regulatory Authority (IFSRA) said it would make sure that NIB's fees and interest reimbursement programme was properly monitored. NIB customers were randomly charged discretionary fees for administration and management time.

These charges were based on a prescribed hourly rate of £10 (€12.70) or later £25 (€31.75), however, prior to 1992, the bank did not provide branches with any guidance on how time spent servicing customers' accounts should be recorded. The quarterly fees charged by NIB on customers' accounts were not broken down, so customers would not have known of the level of fees charged for administration time. In 1992, branch managers and staff were instructed to apply administration charges to "all accounts that are troublesome and time consuming".

Some branch managers used the charge for the previous quarter as a guideline, charging the same or slightly more. In some instances, consideration was given to the level of fees that could be charged without the customer querying it.

The bank's own investigations into improper charging found that fees for customers at NIB's Cork, Carndonagh and Waterford branches could not be justified. Customers of these branches have now been refunded.

The report published yesterday rejects the conclusions of the bank's own investigation that there was no widespread abuse and that fee refunds should be confined to those three branches only. Customers of other branches who were improperly charged fees will get refunds from September onwards.