Ulster Bank €36m overcharge error
Ulster Bank’s admission that it may owe around €36m to 18,000 business loan customers because of an overcharging error has been slammed as “yet another shocking slap in the face for customers” while the sector is “reeling” from the tracker scandal.
The RBS-owned bank said, as part of its tracker examination, it conducted a review of business practices, and processes overall and separately uncovered 18,000 business loan and overdraft customers that had been incorrectly overcharged since 2012.
Ulster Bank’s managing director of commercial banking, Eddie Cullen said: “The overcharge is less than onethird of 1% per annum and the average refund due is less than €2,000. We sincerely apologise to our customers for this and although this will take time to fully resolve, we recognise that full resolution is essential for customers and in building their trust in Ulster Bank.”
It is believed the error was uncovered in April 2017 and that the Central Bank was informed, but that the Department of Finance and Minister Paschal Donohoe were not informed until it became public yesterday evening.
Customers will be written to in the coming weeks and 75% are expected to be redressed and compensated by the end of the year, while it may take until the first quarter of 2019 for the remaining “more complicated” loans to be resolved.
In March 2012, the bank advised customers, via letter, that it was changing the definition of “cost of funds”, which is a variable component of the interest rate charged on their accounts.
As part of the tracker examination, the Central Bank ordered all lenders to examine their practices.
During its review, Ulster Bank found that the facility documentation of some customers’ accounts did not allow for the change in definition, and they were therefore overcharged.
Fianna Fáil finance spokesman Michael McGrath said the revelation came at a time when banking was “reeling from the tracker scandal”.
“How many more overcharging scandals are there of which we have not been made aware? We need to know in detail how this happened, what steps were taken since, and whether there are any wider implications across the other banks.”
Sinn Féin finance spokesman Pearse Doherty said it was “yet another shocking slap in the face for customers”.
“In a way I am not surprised, because little has changed when it comes to banking culture. They will continue to overcharge. I notice there are very few stories of banks undercharging customers.”