Bank of America's credit card firm MBNA fined €750,000 by Irish Central Bank for overcharging customers
By Finfacts Team
Jun 23, 2011 - 3:35 PM

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Bank of America's credit card firm MBNA has fined €750,000 by Irish Central Bank for overcharging customers €17m.

Over 370,000 customers were overcharged almost €17m between July 1st and October 26th 2009 after the company wrongly applied interest rate charges to some credit card accounts from the transaction date.

The systems and controls breaches arose because the firm failed to ensure that there was consistency between the firm’s systems and the terms and conditions. It is noted that although controls existed in respect of the review process, these controls were not effective and resulted in the above detailed overcharging occurring.

In deciding the appropriate penalty to impose, the Central Bank took account of mitigating factors:

  • the firm reported these failures in a timely manner;

  • that all affected customers were remediated by the firm, with appropriate interest, in a timely manner; and

  • the co-operation of the firm during the course of the resolution of the matter and in settling at an early stage in the administrative sanctions procedure.

Director of Enforcement, Peter Oakes, said:"The Central Bank has previously highlighted its concerns relating to control failures that result in customers being overcharged. Overcharging of customers is highlighted as a priority area for the Central Bank in our Enforcement Strategy, and we will continue to focus resources to help achieve acceptable standards across all industry sectors.  We will take enforcement action against regulated entities which fall short of the required standards and their customers legitimate expectations. 

Terms of Business is an important document in which the firm is required to clearly set out the basis upon which it will conduct its business. Firms should review their Terms of Business regularly to ensure that it accurately reflects the terms upon which services are provided.  Firms should also monitor and test their internal control systems regularly to minimise the potential for errors and ensure that errors, if they do occur, are readily and promptly identified and remediated."

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