Ulster Bank is to refund £2m to student account customers overcharged in fees and interest rates. About 16,000 customers in the UK are affected, plus nearly 11,000 account holders in the Irish Republic.
Overcharging occurred because the bank failed to apply concessionary student rates to thousands of accounts. The systems error was discovered in an internal review and only affects student accounts opened prior to December 2005.
In a statement the bank said: "Ulster Bank wishes to apologise to the affected customers for the matter, and will be contacting these individuals to refund them in full over the next few months." Both the Financial Services Authority and Ireland's Financial Regulator have been informed and notified of the system for making repayments.
Total refunds in the UK are £1.05m and in the Irish Republic ¿950,000 (£680,000). Average refunds are £66 (¿88 in Ireland). Compound interest will be included in the payments. The bank has established a helpline to answer customer queries.
Ulster Bank is the Irish division of the Royal Bank of Scotland. A spokeswoman for RBS said that Ulster Bank operates its own systems and that other RBS operations and customers are not affected.
The admission of the overcharge is particularly embarrassing for Ulster Bank as it is the second time in three months that it has had to admit to systems failures that led to millions of pounds in overcharges. In August, it announced it was to begin repaying nearly £3m in overcharges on payment protection insurance (PPI) where customers had repaid loans early. That error, too, was discovered through an internal review.
Dermott Jewell, chief executive of the Consumers' Association of Ireland, said his organisation had previously received a number of complaints about Ulster Bank.
He added that repeated systems errors have created problems for regulators in both territories in which the bank operates. "If systems at the heart of its service provision are not up to scratch and not of sufficient quality then it is a pointless exercise for the regulators," he said.
"For a long time, banks have been pointing out their excellent systems, and they have been charging customers for those systems, yet their internal audits and management structures have been at odds with that. If a bank has had problems of this kind, one would assume from its undertakings that they were not going to happen again."Reuse content