Bank of Queensland will refund 38,000 customers about $34.5 million after they were overcharged in fees and underpaid in interest.

The bank will also incur additional remediation costs of $11.5 million as it refunds about four per cent of its customers after an internal review found the errors.

The review was launched after issues with a mortgage offset account were discovered late last year.

The Bank of Queensland said the errors dated back to 2004.

It has advised corporate watchdog the Australian Securities and Investments Commission (ASIC).

The repayments are expected to be completed by the end of 2014.

The bank said several issues, including “overly complex products which required too many manual processes” were behind the problem.

Managing director Stuart Grimshaw said he was disappointed by the costly mistakes and frustrated they had not been detected earlier, but added that steps had been taken to ensure they did not happen again.

“We are not only addressing the underlying issues but taking proactive steps to minimise future risks,” Mr Grimshaw said in a statement on Thursday.

“This includes simplifying our product suite and improving our back office procedures, for example through the automation of lending processes from origination through to the back office.”

He said systems were now in place to ensure the correct fees were collected.

Meanwhile, BoQ confirmed it will still post a before-tax profit of between $339 million and $368 million.

It said the 2013 dividend payment would at least equal its first half interim distribution of 28 cents a share, fully-franked.

BOQ is due to release its full-year results on October 10.