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Last Updated: Wednesday, 22 August 2007, 15:50 GMT 16:50 UK
Ulster Bank admits overcharging
1 coins
About 4m was overcharged by the Ulster Bank
The Ulster Bank has admitted it has overcharged 25,000 customers in Ireland.

The bank did not refund borrowers owed money on insurance policies after personal loans were repaid early.

However, the bank has apologised and pledged to pay back the money, which totals about 4m euro. The average refund will be 170 euro.

The Consumers' Association of Ireland criticised the bank for allowing the overcharging to happen.

The bank said those affected would receive a refund along with compound interest.

A special helpline had been set up for those who were wrongly billed. The Ulster Bank said the overcharging on the insurance policies took place up until 2005.

An Ulster Bank spokeswoman said: "Following an internal review, Ulster Bank can confirm that we are in the process of contacting a number of customers regarding an error that occurred when personal loans were repaid early.

A paid bill
The bank said it was paying customers back the money they are owed

"At the time of the early repayment, a number of customers did not receive a full refund of Loan Protector Insurance for the remaining term of the loan."

She said the necessary steps had been taken to prevent a recurrence of the error, adding "We apologise for any inconvenience caused."

However, the Consumers' Association of Ireland said internal audits should have picked up on the error.

Chief executive Dermott Jewell said: "It's a damning indictment of Ulster Bank that they have a system that failed at this level."

Two years ago, Bank of Ireland was found to have overcharged 65,000 customers up to 15m euro on similar insurance policies.

"We obviously had incorrectly assumed that lessons had been learnt, clearly they haven't. And clearly again it's the customers who are out of money," said Mr Jewell.

"It's extraordinary that customers find themselves again at the end of a situation whereby they have no control and no real means of having confidence in a banking system that regularly seems to break down."

The consumer watchdog chief urged the Financial Regulator to intervene on behalf of consumers to fully investigate the overcharging and explain why the system continues to fail.

The Financial Regulator said it had been aware of the overcharging and had reported overall figures in its annual report, although these did not give any detail on individual banks or financial institutions involved.

In its report, the Financial Regulator revealed that customers were overcharged a total of 49m, euro by Irish banks last year.

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