Once again, there is much commentary in Irish media on the issue of unregulated loan notes, most recently the sentencing of four individuals for the activity of Customer House Capital (CHC) and its directors.
Most reporting has focused on these wrong doers and how justice has been served.
As an experienced banking insider, I would now like to set out some facts to assist and guide the Irish Consumer as to their rights.
Irish regulated financial brokers are subject to the Consumer Protection Codes.
These Codes specify the conduct demanded of regulated brokers and financial institutions.
Misselling is the deliberate, reckless, or negligent sale of products or services in circumstances where the contract is either misrepresented, or the product or service is unsuitable for the customer’s needs.
I have reviewed sales practices involving Europa Strategic Partners, Solar and CHC and have identified cases of misselling;
While described as Loan Notes (implying second tier capital or security in place) most are in fact equity. Hence the need for senior bank debt in the structures.
If they are equity then that is a breach of the Prospectus Directive.
Redress for consumers is the Financial Services and Pensions Ombudsman (FSPO) but this has not happened for two reasons:
(1)Brokers tell clients it was unregulated;
(2) Solicitors tell clients that FSPO is a waste of time.
More worryingly, the Central Bank tells firms “In general, [it] the statute of limitations should not be relied on to avoid addressing legitimate complaints.”
Providers half-heartedly investigate complaints over 6 years on pensions and mortgages and reject the complaints.
FSPO then refuses to exercise its discretion to go back more than 6 years on mortgages and pensions.
Consumer’s only redress is to High Court where costs are out of proportion to compensation claims.
In UK and US jurisdictions, consumer bodies charged with consumer protection would step in and investigate but Ireland has no dedicated consumer protection body with investigative powers.
CCPC will not address real issues and I have evidence of such.
The Irish consumer is not represented fairly and therefore denied their basic rights under European Law.
Ben Hoey FCCA, AMCT is a Fellow of the Association of Chartered Certified Accountants and an associate member of the Association of Corporate Treasurers, with over 40 years of experience in business and life. Ben is former CFO of Merrill Lynch International Bank and Managing Director of Kennedy Wilson Europe. Ben currently operates a Claims Management company assisting consumers with misconduct claims against financial services companies.