Credit regulator admits findings were in error

The Ombudsman for the Credit Institutions, Mr Gerry Murphy, has decided a finding he made in relation to fees charged by banks when settling credit card bills, was wrong.

A decision by Mr Murphy in May seemed to have positive implications for most traders who accept credit card payments. However, Mr Murphy has now decided he was wrong. He said the banks had no influence on his review of his decision.

Mr John Doupe, of Sue-D-Knits Ltd, Kenmare, Co Kerry, objected to charges being allocated against him by the Bank of Ireland when funds collected by the bank from credit card customers, were being lodged to Mr Doupe's Bank of Ireland business account.

He argued that the fees were being charged for what were essentially internal transfers of money within the bank. The funds were going from the Credit Card Services division of the Bank of Ireland, to his account in the Kenmare branch of Bank of Ireland.

The transactions were for the bank's benefit in order for it to clear its debts and obviated it having to issue cheques or cash, Mr Doupe said. It was unfair that he should have to pay a fee in such circumstances.

Mr Murphy agreed with Mr Doupe and recommended that the bank cease making the charges, return all money taken in charges to date, and make a payment of £500 to Mr Doupe by way of compensation. Mr Doupe appealed the amount of compensation, while the bank appealed the finding. Mr Murphy rejected both appeals.

However, when he was subsequently writing to Mr Doupe, in August, Mr Murphy reviewed the case and decided he was wrong. In his original decision, Mr Murphy decided it was wrong for the bank to be charging fees to Mr Doupe for fulfilling the terms of the credit card contract (for having what Mr Doupe was owed by the bank as a result of credit card transactions, paid to him by the bank).

The Ombudsman has now decided that he did not take "sufficient account" of a second, separate, but equally valid, contract between the two parties. This was the contract covering the operation of Mr Doupe's business account with Bank of Ireland, which sanctioned charges for lodgements to the account. These charges were sanctioned by the Central Bank.

Mr Doupe has received his £500 and the repayment to him of all the relevant lodgement fees charged since he opened his account, about 10 years ago, is in train. In addition, he is not been charged fees for funds lodged in his account by Bank of Ireland Credit Card Services.