Banks face data protection audit

Ireland’s top banks are facing detailed audits from the Office of the Data Protection Commissioner after AIB admitted to supplying incorrect information to the Irish Credit Bureau.

The audits are due to take place over the next couple of months, the office said, to see if similar issues have taken place at other banks.

AIB said it had sent incorrect statements to the Irish Credit Bureau detailing missed loan repayments relating to about 12,000 customers over a six-year period up to July 2012.

The error on the customer arrears cases led to an incorrect report on the repayment history for each affected customer being submitted, the bank told the bureau in a letter on Tuesday.

In cases where customers missed a number of weekly or fortnightly repayments, AIB incorrectly reported the number of missed weekly or fortnight payments as opposed to the number of equivalent months overdue as required by the credit bureau.

Lenders use the bureau’s records to determine the creditworthiness of borrowers before deciding whether to lend to them.

AIB is investigating the impact of the error on a case-by-case basis to determine whether the affected customers have been put at a disadvantage in seeking new loans as a result of the incorrect reporting.

The bank apologised to the customers and promised to cover the expense of seeking a €6 report on each customer’s creditworthiness from the bureau, which could cost the lender up to €72,000 in total.

Ireland South MEP Seán Kelly said the incident highlighted the need for an overhaul of data protection regulations in Ireland.

“The Office of the Data Protection Commissioner has performed excellently in this case, however we need to strengthen and reinforce the office to ensure that it can effectively monitor companies, investigate breaches and protect individuals," he said.

"Our current data protection rules were developed in a very different context, a period when an individual's data was less readily available, when the explosion of the internet, social media and online activity was inconceivable.”

The incorrect reporting of arrears is the latest in a litany of errors and overcharging cases at the bank, which was taken into State control after being bailed out with €21 billion of public money.

The bank said in April it was repaying €3.1 million to 11,500 customers over errors on insurance products sold with credit cards.

The Central Bank fined the bank €2 million, the largest ever imposed on a retail bank, in December 2010 for overcharging significant numbers of customers over a period of several years.

In February 2010 the bank admitted charging 40,000 customers incorrect fees and interest over several years due to an error discovered in November 2008.