MBNA refunds €18m to customers

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 or less, and had written to its customers to let them know of the mistake.

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.

"When this issue was identified, we immediately conducted a full review of all our terms and conditions stretching back to 1997," the company said in a statement.

"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 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, efficiently and fairly correct charging errors and notify all affected customers. MBNA is currently notifying all customers about the issue and will subsequently commence refunding all accounts affected," the regulator said in a statement.

"The Financial Regulator is satisfied with how this matter is now being dealt with and it is engaging with the firm to ensure that procedures and remedial action are undertaken to prevent this type of issue reoccurring."