Fundamental Rights

set down in Article 40 of the Irish Constitution

 

The Fundamental Rights set down in Article 40 of the Irish Constitution include the following :–

---

 

The Lobbying Power

of those within the Financial Services Industry

As we have previously seen (in Section 2.5.7 and Section 2.5.8), in the United Kingdom, the Whitewash of Law governing the Financial Services Industry was perpetuated by those charged with its application, the successive Regulatory Bodies, and this Whitewash could be in no way apportioned to the U.K. legislature.

However, such was not the case in Ireland.

In Ireland, the Whitewash of Law was perpetuated by the Financial Services Industry on two fronts:

	(1) ––– by using its lobbying power to exert a controlling influence over the content of any Statutory Provisions that could conflict with its interests and, most particularly, with the interests of its Management Personnel, and
	(2) ––– by ensuring that its own systems of Self Regulation, which, when those offices came into being, incorporated a controlling influence over the 'Terms of Reference' of the ostensibly independent offices of the Ombudsman for the Credit Institutions and the Insurance Ombudsman, continued to prevail.

In Ireland, the lobbying power of those within the Financial Services Industry was so great that, notwithstanding the fundamental guiding principles of equality set down within the Irish Constitution, they were able to ensure that there would be no provisions within any new Statutory Enactment that could pose a challenge to, or conflict with, their personal financial interests.


It is clear from the preceding Sections on 'The Irish Position' that, in Ireland, the Whitewash of Law was perpetuated within the very Law itself, in the continual acquiescence by the Irish legislature, both by act and omission, to the interests of those within the Financial Services Industry.

 

 

---

 

Consumer Information Act 1978

The propagation of a 'Higher Order' Status

Within the Consumer Information Act 1978, the 'sacred cow' protection status afforded by the Irish legislature and the Central Bank to persons within Financial Services Institutions involved in 'banking business' (i.e. banking business authorised by the Central Bank Act 1971), and the extent of the lobbying power of the Management Personnel within those Institutions, became very much evident.

The provisions of this Act, whereby persons in the course of or for the purposes of a business or profession are deemed guilty of a criminal offence for knowingly, or recklessly, making false or misleading statements, or for giving a misleading indication as to the price or charge for services, are explicitly stated as not applying where such conduct, whether by act or omission, has been perpetrated by a person for the purposes of 'banking business' (i.e. by a bank or its servants or agents).

 

This 'Higher Order' status, afforded by the Irish legislature, under the guidance of its Competent Authority, The Central Bank, to those within Financial Services Institutions authorised by The Central Bank, would continue to be applied through subsequent Irish Statute Law, both by act and omission.

 

The lobbying power of Those in Power within the Financial Services Institutions was therefore such that they were able to ensure that they could continue to sanction the use of false or misleading statements, and giving a misleading indication as to the cost of credit, to induce customers to enter into contracts that favoured their own personal financial interests and the interests of their respective Financial Institutions ——— ALL safe in the knowledge that the Central Bank would continue with its, wholly passive, stance on such matters.

Even when, in 1987, the Irish legislature enacted statutory provisions to combat the use of misleading indications of the 'cost of credit', the lobbying power of those within the Financial Services Institutions was such that it was ensured that those engaged in 'banking business' remained exempt.

This, they achieved by ensuring that these statutory provisions were issued under an Order, the Consumer Information (Consumer Credit) Order 1987, that was governed by the restrictive provisions within the Consumer Information Act 1978, provisions that had already been contrived to exclude 'banking business'.

This specific issue of Financial Services Institutions giving a misleading indication as to the 'cost of credit', and the many negative consequences of same for the customer / consumer, will be seen in Chapter 6: The Cost of Credit.

(See Section 2.4.1: False and Misleading Statements.) 

---

NOTE! 

It should be borne in mind that there is much overlap, in terms of categorisation as a credit product, investment product or insurance product, with many of the products on offer from Financial Services Institutions.

For example, a Financial Services product may encompass all three categories, credit, investment and insurance, as in the case of an Endowment Mortgage, or the two categories, investment and insurance, as in the case of a Life Assurance policy (not financed by credit), or the two categories, credit and investment, as in the case of an Investment Mortgage or as in the case where a client / customer / consumer is being offered an investment product that is to be financed by credit.

---

 

Insurance Act 1989

Whitewash of existing Common Law duty

In the Insurance Act 1989, acquiescence by the Irish legislature to the interests of those within the Financial Services Industry was again clearly manifest in the omission of any Principles regarding Standards and Disclosure (similar to those within the U.K. Financial Services Act 1986) to be applied to any 'codes of conduct' prescribed by the relevant government Minister under power of the Act.

Again, a whitewash, with respect to any substantive codification under statute, of existing Common Law duty!


Note! Remember that, under the Irish Insurance Act 1989, 'investment business' that incorporates life insurance cover, i.e. Life Assurance, is classified as 'insurance business' ! 

This acquiescence by the Irish legislature to the interests of those within the Financial Services Industry was even further manifest when, with the approval of successive controlling Government Departments, the Self Regulatory Authority was allowed to issue its own Code of Conduct for Insurance Intermediaries under the aegis of the Insurance Act 1989, thereby giving the false impression that the many positive assertions made within the Code had a statutory status.


But the Regulatory Regime in Ireland was such that the Code of Conduct for Insurance Intermediaries was viewed by those, who were supposed to be complying  with the letter of its provisions, as being purely aspirational.

Ultimately, compliance was dependent on the honesty and integrity of the Management Personnel of the respective Financial Services Institutions.

But there was no objective scrutiny of such compliance.


Under this system of Self Regulation, there was a minimal-to-zero probability of any negative consequences for those ignoring the letter of the Code of Conduct, while the monetary rewards to be gained were vast.


As a consequence, the Code of Conduct, most particularly in the matter of disclosing any potential conflicts of interest, was treated by those within the Financial Services Industry as if it did not exist.

 (See Section 2.6.1: False Assurance ──── Irish Insurance Act 1989.) 

 

---

 

Dealing with Customers' / Consumers' Grievances

 

Consider now the legal environment, in the matter of dealing with customers' / consumers' grievances, within which the Financial Services Institutions in Ireland operated at this time.

Bear in mind that by this time (i.e. by 1990, when, in Ireland, the Code of Conduct for Insurance Intermediaries was introduced), in the United Kingdom, the Financial Services Conduct of Business Rules had been ratified by the SIB in accordance with the 'Standards and Disclosure' Principles set down in the U.K. Financial Services Act 1986 and had statutory status since April 1988. (See Section 2.5.2.)   

Bear in mind also that by this time, in the United Kingdom, again under power of statute, a contravention of any of the Rules or Regulations relating to the conduct of investment business under the Financial Services Act 1986 was actionable for damages at the suit of a person who suffered loss as a result of the contravention. (Again, remember that under the U.K. Financial Services Act 1986, Life Assurance business is 'investment business'!) (See Section 2.5.5.)

No such statutory status was given to any of the Codes, Rules or Regulations that had been introduced by the Financial Services Industry in Ireland.

 

As has been already evidenced, in Ireland, the lobbying power of the Financial Services Industry was such that it was able to exert a controlling influence over the content of any proposed Statutory Enactments.

Also, the burdens of Common Law duties owed to customers / consumers were treated by those within the Financial Services Industry as if they did not exist.

An aggrieved customer / consumer who wished to make a complaint against a Financial Services Institution had to do so on a stand alone, first principles, basis, with no Regulation datum of objective knowledge on which to substantiate his grievance.

The prospect of any aggrieved customer / consumer taking a legal action against a Financial Services Institution was even more daunting, when one considers the financial and legal clout at the disposal of such Institutions.

The bottom line was that most or all of the objective evidence, by which an aggrieved customer / consumer could formulate a legal action, was in the possession of the Financial Services Institution.

In such an environment, it was very difficult to convince a solicitor, who would have little understanding of the financial trickery at play, and who, at this point in time, would have had little inclination to call into question the integrity of those within the Irish Financial Services Institutions, that there was a case to be answered.

The situation was therefore such that only the Management Personnel of the Financial Services Institutions, i.e. those parties dealing directly with their complaints, would have had a full awareness of the exact nature and substance of customers' / consumers’ grievances.

The nature of those grievances was such that, in the matter of the means by which Financial Services Institutions and those dealing in their investment products unfairly induced consumers to invest in such products, the issues of Fraudulent, Negligent and Statutory Misrepresentation were paramount. (This will be proved beyond all doubt, again and again, in the Chapters that follow.)


The substance of those grievances was such that the exposure of the Financial Services Institutions to damages was widespread.

AND, if it were ever to be properly investigated, the exposure of the Management Personnel of those Institutions to criminal prosecution ── IF the test of what constitutes dishonesty as judged by the 'current standards of ordinary decent people' were to be applied to how they conducted their business ──  was equally widespread.

(See The People v Grey and The Crown v Feely in Section 2.3.6: Fraud and the Conman.)

The Financial Services Institutions' Management Personnel were therefore fully aware of just how exposed they would be if 'what was going on?' (i.e. the systemic systematic misrepresentation of investment products to customers / consumers) ever came to the knowledge of the Legal Profession.

 

Under their own in-house system of dealing with complaints the Financial Services Institutions had full control. They could ensure that there would never be a general awareness among the public of the pervasive abuses being perpetrated against customers / consumers.

If one odd complainant became aware of what the Financial Services Institution knew to be a pervasive abuse, then that complainant could be dealt with quietly, in isolation, and the matter stifled.
 
The Financial Services Institutions' Self Regulatory system was therefore such that they could ensure absolute containment.


But, even in ensuring the absence of any Statutory Regulation that could conflict with their personal financial interests, there was always the possibility that a Common Law legal action could expose the pervasive abuses by which those within the Financial Services Industry in Ireland enriched themselves at the expense of customers / consumers.


And so, the Financial Services Institutions' Management Personnel were also fully aware that to protect their personal financial interests,  they needed to pre-empt the possibility that control of the 'complaints addressing procedures' could be taken out of their hands.

-----------------

It therefore became an imperative for the Financial Services Institutions and, more particularly, for their Management Personnel, that consumers’ / customers' grievances be channelled towards a Self Regulating system over which they could exert a controlling influence, and yet create the illusion of there being a wholly independent procedure for assessment of complaints, and, thereby, effectively neutralise the Irish collective legal consciousness.

 

To this end, the Management Personnel of the Financial Services Institutions introduced the Self Regulation Ombudsman Schemes, where they had full control over the Terms of Reference and, as a result, they were able to dictate and control the process of redress towards which customers / consumers would be directed.

In devising such Self Regulation Ombudsman Schemes, while ostensibly setting up systems that provided independent complaints handling, the Management personnel of the Financial Services Institutions were able to ensure that their system of containment would continue to prevail. The complaints handling procedures, as they had set down within their Terms of Reference, would ensure containment of any issues that could (if brought to public attention) expose a pervasive or systemic abuse of customers / consumers by those within the Financial Services Institutions.

And, most importantly, the legal profession would be kept out of the process.

(The operation of these Self Regulation Ombudsman Schemes, the Credit Institutions' Ombudsman Scheme and the Insurance Ombudsman Scheme, will be discussed separately in the following Section, Section 2.6.5.)

 

---

 

In the Irish Consumer Credit Act 1995, and in the Irish Investment Intermediaries Act 1995, the controlling influence of those within the Financial Services Industry over any provisions that could pose a challenge to, or conflict with, their personal financial interests was, yet again, clearly manifest.

Note! Again, remember that, at this point in time, even though Life Assurance was an investment product, it was classified as 'insurance business' under the Irish Insurance Act 1989 !

---

 

Consumer Credit Act 1995 ─── Extreme Acquiescence

 

In the Consumer Credit Act 1995, the Irish legislature can be seen to have been acquiescent in the extreme to the personal financial interests of those within the Financial Services Industry.

Within the Consumer Credit Act 1995, the Financial Institutions' / Life Assurance Companies' lobby succeeded in effecting a major Whitewash of Law: their lobby ensured that the proposed express Disclosure requirements within the forerunner Consumer Credit Bill (1994) were denied statutory effect within the Act.


The express Disclosure provisions within the Consumer Credit Bill would have given statutory effect to a requirement for the disclosure of potential conflicts of interest and would therefore have been very much to the decision-benefit of the borrower / investor.

But such clearly stipulated statutory Disclosure requirements would also have been very much in conflict with the personal financial interests of those within the Financial Institutions / Life Assurance Companies. Such Disclosure requirements would have led to the Financial Institutions / Life Assurance Companies having to desist from paying remuneration, reward or benefit in kind to its Management Personnel / intermediaries, where such payments could be construed as being likely to be an 'influencing factor' on their Management Personnel's / intermediaries' recommendations to clients (as was the situation in the U.K.).

 

Such extreme acquiescence by the legislature raises the question of collusion to ensure that there would continue to be a lack of awareness among consumers generally of the Common Law duty of those in fiduciary positions to disclose material information, including potential conflicts of interest  ───  the end result of such acquiescence being continuance of the 'Gravy Train' that syphoned covert commissions into the personal wealth of those within the Financial Services Sector.

Bear in mind that the primary purpose of such Statutory Legislation is to codify important Common Law duties and rights which are being systemically abused to the detriment of society.

That the legislature could be dissuaded from the codification of such rights and duties smacks of collusion by parties of influence within the legislature.

Again, remember that, in the U.K., express 'Standards and Disclosure' Principles, based on the precedents already set down under Common Law, had been codified under statute since the enactment of the U.K. Financial Services Act 1986 !

Remember also that, in the U.K., a breach of any of the Rules or Regulations issued in compliance with these 'Standards and Disclosure' Principles constituted a cause of action for damages by the wronged party / consumer, directly, through a Court of Law !

But, in Ireland, the Financial Institutions / Life Assurance Companies lobby succeeded in ensuring that there would be no such transfer of knowledge or power to the customer / client / consumer, and that their contrived system of Self Regulation would continue to prevail.

(See Section 2.6.2: Huffing and Puffing ──── Irish Investment Intermediaries Act 1995 and Irish Consumer Credit Act 1995.)

 

---

 

Investment Intermediaries Act 1995

Retaining Control of the Regulatory Regime

 

Within the Investment Intermediaries Act 1995, by ensuring that investment intermediaries for Life Assurance investment products were not governed by the provisions of the Act, the Financial Services Institutions' / Life Assurance Companies' lobby succeeded in ensuring that they retained full control of the Regulatory Regime.

When the Central Bank issued its Code of Conduct for Investment Business Firms in June 1996, and again when the Central Bank issued its Code of Conduct (and Advertising) Requirements in November 2000, it made no effort to make consumers / customers / clients generally aware of the contents of these Requirements, or even of their existence.

While this further exemplifies the success of the lobbying power of the Financial Services Institutions / Life Assurance Companies, whereby, the continued and deliberately passive role (a deliberate silence) adopted by the Central Bank with respect to its successive Codes of Conduct provisions ensured the continued ignorance of consumers / customers with respect to the pervasive breaches of Common Law and Criminal Law by those within the Financial Institutions, when the Central Bank was given Regulatory control over the activities of the Life Assurance Companies under the Insurance Act 2000 (as related below), it chose to do nothing anyway to redress these wrongs.

(See Section 2.6.3: A Marked Absence of Teeth ──── Irish Investment Intermediaries Act 1995 and Irish Insurance Act 2000. See also Section 2.6.2: Huffing and Puffing ──── Irish Consumer Credit Act 1995.)

 

---

 

Insurance Act 2000 ─── A False Dawn

 

This system of Self Regulation continued to prevail until, by a provision within the Insurance Act 2000, the definition of an ‘investment product intermediary’ was altered to include an ‘investment business firm’ (or a certified solicitor) dealing in ‘insurance policies’.

As a consequence, from 1^st November 2001, the Life Assurance Companies and those dealing in their products were brought under the independent regulatory control of the Central Bank, and they were required to comply with all the Code of Conduct (and Advertising) Requirements that had been issued by the Central Bank under power of the Investment Intermediaries Act 1995.

BUT THIS WAS IN THEORY ONLY !

For, even though the activities of the Life Assurance Companies now came under the Irish Central Bank's regulatory control, and even though the Central Bank would by this time have been well aware of the situation in the United Kingdom, where the widespread abuse of customers / consumers by Life Assurance Companies had been exposed, the Central Bank chose to stand by and do nothing.

The Central Bank continued to allow the Insurance / Life Assurance Industry's contrived system of Self-Regulation to prevail under its Insurance Ombudsman Scheme. (The operation of the Insurance Ombudsman Scheme will be discussed separately in Section 2.6.5.)

By deliberately adopting a wholly passive role in respect of its regulatory functions, the Central Bank ensured that the Financial Services Institutions' own Self Regulatory Systems of Control and Containment would continue in operation  ──  UNTIL SUCH TIME THAT  ──  by a deliberate contortion of Regulation and Legislation  ──  IT COULD BE CONTRIVED that the systemic frauds and misrepresentstions perpetrated by those within the Financial Services Institutions / Life Assurance Companies over the preceding years could be successfully obfuscated.

By obscuring the past, it could, in time, be contended that nothing untoward had ever actually happened.

This contrivance of Regulation and Legislation will become evident in Section 2.6.6, The Whitewash Imperative, Section 2.6.7, A Stitch-Up in Time, Section 2.6.8, Some Men are More Equal than Others, and Section 2.6.9, From Whitewash to Quicklime ─ Pro-Active Concealment.

 

---

The Central Bank

Not a 'proactive bone' within its Corporate Body

 

While the transfer of regulatory control to the Central Bank by the enactment of the Insurance Act 2000 was touted as a major step forward for customers / consumers, the Irish legislature again kowtowed to the Financial Institutions' / Life Assurance Companies' interests.


Again, as with all previous legislation governing the Financial Services Industry, there was a marked omission from the Insurance Act 2000 of any provisions whereby the aggrieved customer / consumer could seek direct remedy through the Courts for a breach of any of the Central Bank's Code of Conduct (and Advertising) Requirements. This, even though both the Irish legislature and its Competent Authority, The Central Bank, had full knowledge that such provisions existed under U.K. statute for over a decade at this stage.


Nor was there any effort by the Central Bank's new Regulatory Regime to engage in proactive interrogation of the pervasive questionable practices within the Financial Services Industry.


Notwithstanding the independence of its office, the Central Bank remained wholly passive in the execution of its functions and, as a result, it both assured continuance with the system of cosy soft-touch regulation and ensured that there would continue to be a lack of awareness of 'causes of action' among customers / consumers generally —— ALL very much to the benefit of the Financial Services Institutions and their Management Personnel.

 

---

The Distortion of Ethics to protect a 'Higher Order'

But, again and again, throughout the years of 'so called' statutory reform, it is in its failure to create express statutory offences and penalties for fraudulent misrepresentation within the provisions of its legislation governing Financial Services activities that the acquiescence of the Irish legislature, under guidance of its Competent Authority, The Central Bank, to the interests of those within the Financial Services Institutions is most outrageously manifest.

That the Irish Central Bank, which would have been very much au fait with the correlative Financial Services legislation in the U.K. in this regard, chose, over a period of many years, to be seen not to exhort the Irish legislature to correct this continued blatant omission from Statute Law, reflected its bias towards protecting the interests of those within the Financial Services Industry.

But, it must also be borne in mind that the greatest influence on the Irish legislature in the matter of Statutory Legislation and Regulation governing the Financial Services Sector IS its Competent Authority, The Central Bank.

The contrivance within Section 37 of the Investment Intermediaries Act 1995 was that the Central Bank be directed and empowered to issue Codes that ensured that investment firms act honestly.

But, it was equally contrived that there would be no penal consequences for being dishonest.

There were several statutory offences created within the Investment Intermediaries Act 1995 that carried penal consequences of up to ten years in prison.

Yet, under that same legislation, a means was contrived by the Irish legislature and its Competent Authority, The Central Bank, whereby both Fraud at Common Law and Criminal Fraud, when perpetrated by a Financial Services Institution or its Management Personnel, would be whitewashed as merely being a breach of one of its Code of Conduct Requirements.

Once again, those within the Irish Financial Services Sector, who chose to profit by engaging in dishonest conduct, and the Management Personnel of Financial Services Institutions who also profited by, or colluded in, or condoned, such dishonest conduct, were afforded special protections from the Law, the Law to which the rest of Irish citizens were subject. 

Once again, their 'Higher Order' status was maintained.

 

(See the boxed NOTE! at the end of Section 2.6.3.)

Note!  This proactive distortion of ethics by the Central Bank went beyond its customary ethos of passive collusion. Between them, the Irish legislature and its guiding Competent Authority perverted the principles of Equality and Justice upon which the Irish State was founded.