Company: Allied Irish
Allied Irish admits overcharging
|7th May 2004
||Questionable Business Practice
|Allied Irish Bank, Ireland's biggest banking group has admitted overcharging foreign exchange customers 14m euros.
The Irish Financial Services Regulatory Authority said they are investigating and is in talks with the bank to make reparations get underway.
AIB is examining how compensation can be appropriately paid to customers.
The large sums in charges have arisen because the bank's software system miscalculated foreign exchange fees for nearly 10 years.
The transactions involved are believed to have involved drafts rather than cash.
"We fully accept that we made a mistake and we are very sorry and embarrassed by it", said AIB executive John Hickey.
"We will establish very clearly who knew about it and when", he said.
As long ago as 1996 the bank said it had informed Ireland's Office of the Director of Consumer Affairs (DCA) about a wide range of foreign exchange charges and margins.
In that notification there was an error of 0.5% in one of the margins which adds up over time to a 14m euros discrepancy.
The AIB charges 1% on non-cash transactions over £500 ($898) not 0.5% as it stated in the notification.
The AIB said the error was not addressed until last month.
Allied hit the headlines in 2002 when rogue trader, John Rusnak, allegedly cost the bank $691m in a foreign exchange fraud at its subsidiary Allfirst in Baltimore.