MBNA to refund €18m as interest error comes to light

 

MBNA IS to refund about €18 million to customers after it discovered an error had been made in how interest was calculated.

The company said those affected by the error would receive about €38 each.

The refund is due to a drafting error in the credit card firm’s terms and conditions. Although the firm applied interest according to its own marketing material, the drafting error meant doing so broke its own terms and conditions in some circumstances.

Any credit card that carries the name MBNA on the back could be affected by the overcharging. The company’s cards are affiliated to the EBS building society, Ryanair, Postbank and Axa.

In some cases, interest was mistakenly applied between the date a cardholder bought a product and the date the company issued a statement. There was also an error in how MBNA charged for cash withdrawals and for the government’s credit card levy, with some of the issues stretching back to 1997. “When this issue was identified, we immediately conducted a full review of all our terms and conditions stretching back to 1997,” the company said.

“As a result of this we discovered an additional error and therefore we will refund any interest which may have been applied on the annual Government tax charged on accounts up to 2007 on the basis that we didn’t set out how interest would be applied.”

MBNA, which is the third-largest credit card provider in the State, said it was starting a review of accounts to see who was affected by the error, warning it was “complex and lengthy”. However, it said customers should receive the refund, plus related interest, by March 2010.

The Financial Regulator said it was satisfied with how MBNA had dealt with the issue. “The Consumer Protection Code requires that firms speedily . . . correct charging errors and notify all affected customers.” – (Additional reporting Guardianservice)