Ulster Bank is set to pay thousands of customers back after another blunder in the latest in a long line of scandals for the sector.
The bank has admitted it is having to compensate 17,000 business customers for a second time after miscalculating the interest it charged them on loans.
It comes after a spate of controversy over charging consumers at the exiting bank and a €38million fine for overcharging mortgage customers.
Now the bank is writing to 17,000 business customers to say it has discovered more excessive charges on their loans and overdrafts.
The bank initially contacted these individuals in late 2018 to tell them they had overcharged and spent funds.
Businessman and mortgage arrears activist David Hall, who owns a private ambulance business, was one of those affected.
He received two letters from the bank with two refund checks in respect of two different accounts. One check is €4,825 and another €1,077.
Mr Hall said it was exceptional that Ulster Bank needed “a second bite in the cherry” to clean up the mess of its formation.
Ulster Bank said it wrote to some business loan and overdraft customers who were hit by an interest rate overload error on their part between 2012 and 2022.
“It is estimated that around 17,000 customers have been affected by this issue and the average refund is around €500, with around 80 percent of those affected customers receiving a refund of €500 or less.
“We sincerely apologize for this mistake. Ulster Bank plans to be in direct contact with customers and former customers between now and the end of the first quarter of 2023 to explain the issue and give them their refunds. This was communicated to the central bank in December 2021.”
The bank said the problem affected some customers who arranged their loan or overdraft products before April 2012.
The error was identified in the due diligence for the loan sales as part of the Ulster Bank withdrawal.
Customers don’t have to do anything
“The error relates to the interest rate used to calculate refunds paid for a previous interest overrun error and applied to open accounts to subsequently correct the error, which was not rounded down to the nearest 5 basis points, resulting in an interest rate overrun,” the bank said
Customers do not need to take any action as Ulster Bank said it will write to all affected customers and issue refunds.
In March last year, the Ulster Bank was fined a record €37.8 million by the central bank for its role in the state mortgage scandal. The central bank said the lender developed “deliberate” strategies to draw borrowers away from cheap mortgages during the financial crisis, only fixing the problems for those who complained.
In March 2019, the bank had to refund 9,800 mortgage accountholders who were overcharged on mortgages taken out between 2001 and 2008. Customers received an average refund of €2,300, plus compensation from €100 upwards.
https://www.independent.ie/business/personal-finance/banking/ulster-bank-overcharged-17000-firms-loan-interest-42217754.html Ulster Bank has overcharged 17,000 firms on loans