Customers of financial institutions were overcharged by more than €50 million over the last 12 months bringing to €118 million the total overcharged by financial services industry since 2004, the financial watchdog said today.
The Financial Regulator said at the launch of its annual report for 2005 today, the financial institutions were being pursued to repay the money. In cases where the customer could not be identified, the firm was not allowed to benefit and they were being instructed to pay the money to a charity.
Among the overcharging issues identified was the more than €18 million due to be repaid by Bank of Ireland for overcharging on payment protection insurance and a further €11 million to be reimbursed to National Irish Bank customers who were improperly charged.
AIB is also in the process of repaying €34.2 million for overcharging on foreign exchange transactions.
In its annual report for 2005, the Regulator said since May 2004, 36 firms were being monitored after they were found to have made billing mistakes as part of the €118 million overcharging.
The Bank of Ireland and AIB reimbursement programmes are now largely complete with delays put down to difficulties in tracking down customers.
Mary O'Dea, the watchdog's consumer director, said it was critically important to resolve issues such as overcharging to improve public confidence.
"During the year we spent considerable time and resources dealing with reimbursement programmes for consumers arising out of charging issues in the past," she said.
She added that the financial institutions involved were identifying customers so that they could be reimbursed.
The regulator also said it has held regular meetings with mortgage lenders and the Central Bank to ensure 40 year and 100 per cent mortgages were being adequately stress tested.
Patrick Neary, ceo of the Regulator said 100 per cent or interest only mortgage products were "not suitable for everybody". He said affordability was the key issue but that he was reluctant to proscribe what was allowable because these products were appropriate for some borrowers.
He said the evidence available to the Regulator was that 6 per cent of new mortgages were 100 per cent mortgages and that demand for these products were falling. All mortgages were stress tested for ability to pay in the event of a 2 per cent rate rise.
However, Mr Neary admitted this was at variance with a recent Davy's Stockbroker report that showed 40 per cent of all new mortgages were advanced on the basis of 100 per cent finance. This was an issue the regulator would investigate further, he said.
Brian Patterson, chairman of the Regulator, told a press conference in Dublin today that it was and would remain the responsibility of the lender to ensure that the borrower can pay.
Since the end of 2005 the Regulator is responsible for the supervision of 9,638 firms and funds. Last year it conducted 584 prudential, consumer focused and credit union inspections, analyased over 57,000 returns and authorised 2,178 financial services providers and 582 funds.
It also handled more than 23,000 customer contacts.
Mr Neary added that 33 suspected criminal offences or breaches of company or competition law were reported, the majority to An Garda. He said the regulator has also acted on 115 advertising issues.
The Regulator said its cost surveys had identified possible annual savings of up to €2,000 on motor insurance, €1,200 on fixed rate loans and €5,000 during the term of a life insurance policy.
