AIB has admitted it has repaid €3.4 million to some customers who were incorrectly charged on trusts they held with the bank and expects to pay up to €2 million to others who are entitled to refunds.
The Republic's biggest bank said that in 2002 it identified a potential issue in relation to the charges applied to trusts that had been established before AIB was formed 33 years ago and immediately launched an investigation.
AIB said it had identified 43 trusts established by its customers, which were entitled to receive a refund and to be awarded compensation for being overcharged. "Refunds amounting to a total of €1.7 million and compensation also amounting to a total of €1.7 million was agreed. This process has now been concluded," the bank said.
AIB said it had immediately informed the Irish Financial Services Regulatory Authority (IFSRA) and has been working with it to identify and to compensate those customers who had overpaid for this service.
A number of other trusts, which have since been closed, were also identified as being eligible for refunds and the bank is still trying to identify the exact number of trusts and their beneficiaries to repay those monies. "The likely total refund and compensation sum in relation to the closed funds will, it is estimated, be less than €2 million," according to the bank.
The bank is currently being investigated for overcharging some customers on foreign exchange transactions to the tune of €20 million and has been told to pay a further €5 million in compensation to those individuals.
The bank decision to automatically apply a payment protection policy to certain mortgage customers without their knowledge is also being examined.
An IFSRA spokesman confirmed that it had been working with the bank on this issue for two years.
The regulator has sought powers from the Government to "name and shame" financial institutions that are found to have breached its codes and the law and this provision is contained in legislation currently before the Oireachtas.
In 2001 Bank of Ireland had to reimburse some of its trust customers who had been incorrectly charged for the service.
The bank has refused to disclose the sums involved and said only a small number of cases were involved.
Meanwhile, AIB chief executive, Mr Michael Buckley, reiterated that the bank would not appear before the Joint Oireachtas Committee on Finance and Public Service tomorrow.
The committee chairman, Mr Seán Fleming TD, wrote to Mr Buckley to ask him to reconsider the bank's stance.