Consumer agency against AIB fee change

AIB’S DECISION to alter how it calculates fees on its current accounts and make it more difficult for hundreds of thousands of customers to qualify for free banking has been condemned by the National Consumer Agency (NCA) as “overly restrictive and disappointing”.

From May 28th, current account customers will have to keep the balance of their accounts above €2,500 or face fees that could top €100 a year. At present they need only make one purchase on an AIB debit card and carry out one transaction through AIB phone and internet banking during the fee quarter to qualify.

Those who fail to meet the criteria will be charged €4.50 per quarter as a maintenance fee. Charges will also apply to other transactions. The use of a laser card will see consumers hit with a 20 cent charge, while withdrawing cash at a branch will cost 30 cent each time.

AIB claimed that 40 per cent of its customers would still qualify for free banking, but this includes student and graduate accounts, and customers over 60 on AIB Advantage accounts, who will continue to get free banking under the existing terms of their accounts.

“While this was a difficult decision to make, nonetheless it is a necessary one if we are to continue to create the conditions in which we can become a strong and viable entity again,” AIB’s director of personal and business banking, Bernard Byrne, said.

“The fact that this new condition is based on your ability to maintain a €2,500 balance in your current account is very restrictive and disappointing at a time when many consumers are struggling to manage their money,” the NCA’s chief executive Ann Fitzgerald said. “Clearly, many people do not have €2,500 that they can leave permanently sitting in their current account.”

She pointed out that, with no interest paid on credit balances in most current accounts, consumers who chose to leave €2,500 on deposit with AIB would lose out on €100 a year in interest they could earn if this money was on deposit in an interest-paying account.

“Many consumers will be unable to meet this condition unless they move money from a savings account into their current account, thereby losing out on the interest they would earn,” Ms Fitzgerald said. “But the decision really depends on how you use your account. Consumers who are heavy users of their current account may be better off maintaining the €2,500 credit balance, thereby saving more money by avoiding charges than they would earn on deposit.

“AIB’s statement also refers to the approximately 40 per cent of customers who will still qualify for free banking under the new criteria. As this 40 per cent includes students, graduates and over-60s, who all currently have free banking, we would ask AIB to clarify what proportion of their personal current account customers will lose free banking as a result of this decision.”

The NCA called on AIB customers who met the previous criteria for free banking to use the next two months to assess the charges they would be subject to, and to consider switching accounts to maintain free banking services.