AIB has begun the process of repaying almost €26 million to customers who were wrongly overcharged for foreign exchange transactions, the bank confirmed yesterday.
Between 1995 and April this year, AIB charged 1 per cent on every non-cash foreign exchange transaction worth more than €635 (£500), when it should have charged half that amount.
The Irish Financial Services Regulatory Authority (IFSRA) is investigating the bank's blunder and has ordered it to repay customers €25.6 million in charges and interest.
An AIB spokeswoman confirmed yesterday that it had credited 170,000 accounts last Friday, and had written to the customers to inform them it had lodged the money to their accounts.
"We said last July that we would begin this process in August, and we started last Friday with 170,000 accounts," she said.
"The total amount is going to be about €25 million."
She added that it was not possible to say how many customers would ultimately be repaid as it was not possible to identify all of them. She said the accounts that were reimbursed on Friday were those that could be automatically identified.
As well as IFSRA's investigation, the bank itself appointed former Comptroller and Auditor General (C&AG), Mr Lauri McDonnell, to carry out in independent internal inquiry. He will report to the financial regulator when that investigation is finished.
In an interim report on its inquiry last month, IFSRA said it had discovered that the bank had overcharged 70,000 customers for 24 other services in addition to the foreign exchange transactions. It calculated AIB's total overcharging liability at €34 million.
At the time, its chief executive, Mr Liam O'Reilly, said the authority was trying to establish if the bank had attempted to cover up the issue. The financial watchdog is set to report again in the autumn.
By charging 1 per cent instead of 0.5 per cent on foreign exchange transactions, AIB was in breach of consumer protection law. In 1995, it notified the Office of the Director of Consumer Affairs, which regulated the area at the time, that it was imposing the 0.5 per cent levy for the service.
However, it actually charged 1 per cent.
In response to a specific request in 1998, the bank assured the director's office that it was charging the correct amount on the foreign exchange transactions involved.
One of AIB's individual business units spotted the anomaly in 2002, but the bank did not rectify it at that stage. It continued to charge the higher rate until April when the difference between the notified and actual levies came to light again.
