Again, be aware 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.

The Credit Institutions Ombudsman Scheme

Maintaining Control

In 1990, Credit Institutions operating in the Irish Financial Services Industry, through a Board of Directors assembled under their mandate, established the Credit Institutions' Ombudsman Scheme. This Scheme came into operation from 1st October 1990.

This Board of Directors (as assembled by the Credit Institutions), through the Credit Institutions' Ombudsman Scheme, established arrangements whereby an independent adjudicator, the Ombudsman, could deal with certain types of unresolved complaints against participating Credit Institutions.

This Board of Directors appointed a Council to monitor the functioning of the Scheme.

This Council duly appointed the Ombudsman, subject to such appointment being approved by the Board of Directors. The person appointed Credit Institutions' Ombudsman was Mr. Gerry Murphy, a barrister.

This Board of Directors' Council received the Ombudsman's Annual Reports, and approved and published these Reports.

This Board of Directors' Council was also charged with ensuring that the Ombudsman did not act outside his Terms of Reference.

BUT, while the Ombudsman was to, ostensibly, operate as an independent adjudicator, his Terms of Reference were set down by the Credit Institutions' Board of Directors.

DE FACTO, the Management Personnel within the Credit Institutions controlled the Terms of Reference under which the Ombudsman Scheme was to operate.

ALSO, while the optics were such that the Credit Institutions' Board of Directors appeared not to have a controlling influence over the Council, the Council appointed by the Board of Directors consisting of nine members of whom the majority in number were independent, the reality was very much different.

The contrived weighting of knowledge with respect to the complexities of Financial Services activities was such that there would never be any concerted affront, from within the appointed Council, to how Credit Institutions conducted their business in Ireland.

For, while the majority in number were independent, the majority of those appointed to the Council who would have knowledge of the intricate means by which financial services products were misrepresented to individual customers came from within the Credit Institutions themselves.

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

The Board of Directors' Council published an Explanatory Leaflet, titled 'The Ombudsman for the Credit Institutions', which set out how the Credit Institutions' Ombudsman Scheme operated. (See Appendix 2/2.)

Copies of this Explanatory Leaflet were on display and made available to all customers in the public area of all participating Credit Institutions.

A copy of this Explanatory Leaflet was also posted out to a complainant following his first contacting the Ombudsman's Office.

The Council's Explanatory Leaflet set down, in specific detail, the list of matters which the Ombudsman was precluded from investigating and the required steps that had to be followed by a complainant before the Ombudsman could investigate a complaint.

Under the highlighted heading, 'ARE THERE ANY MATTERS WHICH THE OMBUDSMAN CAN'T INVESTIGATE ?', on the specific matter of the time constraints, the Council's explanatory leaflet stated:-

Under another highlighted heading, 'HOW DO YOU BRING YOUR COMPLAINT BEFORE THE OMBUDSMAN ?', the Council's explanatory leaflet set down in detail a defined sequence by which an aggrieved customer must seek to have a complaint resolved :–

In submitting his complaint to the Ombudsman, the complainant was directed by the Ombudsman's Office to also forward all correspondence with the Financial Services Institution on the matter.

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

The system of Self Regulation was therefore such that the aggrieved customer / consumer had to follow a defined complaints procedure set down by the Financial Institutions within in their Terms of Reference, and submit his grievance, not on the objective basis of an informed awareness of what would constitute a breach of Common Law, or of Statute Law, or even of a Self Regulatory Code, but on a wholly subjective basis.

The Self Regulatory system was designed to ensure that each issue of complaint would be dealt with in isolation, and that there would be maximum-to-absolute containment with respect to any issue that could, if brought to public attention, or to the attention of the Prosecuting Authorities [the Office of the Director of Consumer Affairs (ODCA) and the Fraud Squad] expose a pervasive and systemic abuse of customers / consumers by those within the Financial Institutions.

This policy of ensuring containment was intrinsic to the Financial Services Institutions' Self Regulatory system and was therefore inherently manifest within the functioning of both the Credit Institutions' Ombudsman Scheme and the Insurance Ombudsman Scheme. In the context of both Schemes, this will be discussed further below under 'The Ombudsman Schemes: Ensuring Containment'.

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

BUT, the Self Regulatory system was such that the contrived entity that was the Credit Institutions' Ombudsman Scheme also incorporated ─ within itself ─ a perverse abuse of process. 

Consider the following!

After two years of correspondence with them regarding my contention that they had misrepresented their Endowment Mortgage contract to me, the First National Building Society informed me (in April 1995) that if I was not satisfied with their response I could take the matter up with the Credit Institutions' Ombudsman.

I duly acquired a copy of 'The Ombudsman for the Credit Institutions' Explanatory Leaflet (this was the October 1992 issue of this Explanatory Leaflet).

The only information conveyed to the complainant in the Credit Institutions' Ombudsman's Explanatory Leaflet on the specific matter of the time constraints was that:-

I had been trying through various channels for over a year to acquire the documentation critical to the formulation of my case against the First National Building Society, i.e. the documentation on which my decision to enter into a contract with them had been based, the most critical document being the 'Endowment versus Repayment' Mortgage Quotation presented to me (see Case 1 of Appendix 1/2) at my pre-contract meeting with the First National Building Society ─── but my efforts proved fruitless.

I contacted the Ombudsman's Office in November 1996 and I was sent out a Complaint Form and a copy of the Credit Institutions' Ombudsman's Explanatory Leaflet.

This was the September 1995 issue of the Explanatory Leaflet. (See Appendix 2/2.)

The information conveyed to the complainant in the 1995 issue of the Credit Institutions' Ombudsman's Explanatory Leaflet on the specific matter of the time constraints was exactly the same as that in the 1992 issue (as cited above).

In December 1997, I wrote to the Ombudsman requesting that he investigate our complaint regarding the manner in which my wife and I had been induced to enter into an Endowment Mortgage contract.

In particular, my submission to the Ombudsman highlighted the fact that I could not fully present our case without discovery of critical documentation (see above) from the First National Building Society and I requested discovery of these documents through the Ombudsman's Office.

My submission to the Ombudsman contained (1) the completed Complaint Form, (2) a Letter to the Ombudsman (eighteen A4 typed pages) outlining our dealings with the First National Building Society and (3) a Book of Documentation (one hundred and ten pages, many of them hand written) comprising the correspondence relevant to our case.

The shocking reply from the Complaints Officer in the Ombudsman's Office stated:-

No such time limit is noted anywhere in the Credit Institutions' Ombudsman's Explanatory Leaflet, as issued in October 1992.

No such time limit is noted anywhere in the Credit Institutions' Ombudsman's Explanatory Leaflet, as issued in September 1995.

Nor was the existence of any such time limit conveyed to me by the Ombudsman's Office when I was forwarded a copy of the September 1995 issue Explanatory Leaflet in December 1996.

On 4^th March 1998, I wrote again to the Ombudsman highlighting these facts and the covert nature of the preclusion clause by which he had refused to investigate our complaint. I also informed him that I had written directly to the First National Building Society (on 23^rd January 1998) seeking their disclosure to me of the critical documentation I required and that their response was that they would deliberate on the matter. I asked that the Ombudsman reconsider his stance with regard to our case and, in particular, that he pursue our request for disclosure of the critical documentation I required from the Building Society. But my pleadings were to no avail.

That such a covert preclusion clause should have existed within the Ombudsman's Terms of Reference ─── over a period of 6 years (by this stage) ─── and through three successive versions of the Credit Institutions' Ombudsman's Explanatory Leaflet issued by the Board of Directors' Council ─── and to the definite knowledge of the Ombudsman himself ─── and yet not be brought to the attention of the complainant, shows a deliberate continuation of what can only be described as a downright perverse abuse of process!

But this preclusion clause, whereby the complainant was denied access to the Ombudsman Scheme unless his complaint was submitted within a six month time limit that he was completely unaware existed, continued to provide yet another rampart of defence for the controlling Financial Institutions.

At each successive renewal by the Board of Directors' Council of the issue of the Credit Institutions' Ombudsman's Explanatory Leaflet, a conscious decision was therefore made not to bring the existence of this, very much material, preclusion clause within the Ombudsman's Terms of Reference to the notice of customers /consumers.

That each and every one of the Board of Directors' Council and the, presented as independent, Ombudsman, who was himself a barrister, should continue by their silence to condone such an abuse of process ─── shows where the real control of the Credit Institutions' Ombudsman's Office lay.

Note! In the case of the Insurance Ombudsman Scheme (related below), this 6 months time constraint was clearly set down in the Insurance Ombudsman's Explanatory Leaflet, where it stated that 'You may refer your dispute to the Ombudsman: Provided ─── you do so within six months of having received written confirmation from the company that no settlement has resulted'. The Insurance Ombudsman Scheme was set up in March 1992 and, when one considers the fact that all of the major Financial Services Institutions in Ireland were both Credit Institutions and Life Assurance Institutions, it is reasonable to conclude that the decision not to bring this preclusion clause within the Credit Institutions' Ombudsman's Terms of Reference to the knowledge of the customer / consumer were made with conscious knowledge. 

The Insurance Ombudsman Scheme

Maintaining Control

In Ireland, the Irish Insurance Federation (IIF) was the representative body for those dealing in Insurance products of all kinds, including Life Assurance products.

NOTE!  In this website-book, our primary concern with respect to the operation of the Insurance Ombudsman Scheme is to the extent that the Insurance Ombudsman was empowered to regulate the activities of the Life Assurance Institutions.

In 1992, through a Board of Directors assembled from the Insurance / Life Assurance Industry under its mandate, the Irish Insurance Federation (IIF) established the Office of the Insurance Ombudsman of Ireland. The Insurance Ombudsman Scheme came into operation from March 1992.

This Board of Directors (as assembled by the Irish Insurance Federation) established that the Insurance Ombudsman could 'receive references in relation to complaints, disputes and claims made in connection with or arising out of policies of insurance' (these included such matters in respect of Life Assurance policies) and it appointed a Council to monitor the functioning of the Insurance Ombudsman Scheme.

This Council duly appointed the Insurance Ombudsman, subject to such appointment being approved by the Board of Directors. The person appointed Insurance Ombudsman was Ms. Paulyn Marrinan-Quinn, a barrister.

This Board of Directors' Council received the Insurance Ombudsman's annual reports, and approved and published these reports.

This Board of Directors' Council was also charged with ensuring that the Ombudsman did not act outside her Terms of Reference.

BUT, as had been the case with the Credit Institutions' Ombudsman Scheme, while, ostensibly, the Insurance Ombudsman was to operate as an independent adjudicator, her Terms of Reference were set down by the Board of Directors that had been assembled by the IIF from the Insurance / Life Assurance Institutions.

DE FACTO, the Management Personnel within the Insurance / Life Assurance Institutions controlled the Terms of Reference under which the Ombudsman Scheme was to operate.

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

The operation of the Insurance Ombudsman Scheme was set out in an Explanatory Leaflet, titled 'Insurance Ombudsman of Ireland', issued by the Insurance Ombudsman's Office. (See Appendix 2/3.)

This Explanatory Leaflet set down the determining constraints to be complied with by the complainant before a dispute could be referred to the Insurance Ombudsman.

In highlighted heading, the Insurance Ombudsman's explanatory leaflet stated:-

You may refer your dispute to the Ombudsman:

And so, under the Insurance Ombudsman Scheme, the Self Regulation System in operation for the Life Assurance Industry was such that the illusion was imparted to the public at large and to the unsuspecting legal profession that there was positive Regulation of the Life Assurance Industry by the Insurance Ombudsman's Office, while the Terms of Reference imposed by the Life Assurance Institutions were very much contrived to ensure that the systemic abuses of Law by which they operated would never be called into question.

When it came to the key elements by which the Life Assurance Institutions and their Management Personnel syphoned off money from the investments of customers / consumers, the Life Assurance Institutions ensured that they retained absolute control over the functioning of the Office of the Insurance Ombudsman.

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

Again, as with the Credit Institutions' Ombudsman Scheme, the system of Self Regulation was such that the aggrieved customer / consumer had to follow a defined complaints procedure set down by the Financial Institutions within in their Terms of Reference, and submit his grievance, not on the objective basis of an informed awareness of what would constitute a breach of Common Law, or of Statute Law, or even of a Self Regulatory Code, but  on a wholly subjective basis.

Again, the Self Regulatory system was designed to ensure that each issue of complaint would be dealt with in isolation, and that there would be maximum-to-absolute containment with respect to any issue that could, if brought to public attention, expose a pervasive or systemic abuse of customers / consumers by those within the Insurance / Life Assurance Institutions.

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

NOT ONLY did those within the Insurance / Life Assurance Institutions control the functioning of the Insurance Ombudsman Scheme through the constraints set down by them within their Terms of Reference,  ──────────  BUT, it would appear, from the assertions made in a public letter by a member of the Board of Directors' Council, that they also sought to exert a controlling influence over the very Office of the Ombudsman itself.

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

Ms.Paulyn Marrinan Quinn, the Insurance Ombudsman appointed from the outset of the Scheme, was very much her own woman, and fought bravely to assert a true independence in the functioning of her Office.

Unfortunately, the controlling interests of those within the Insurance / Life Assurance Institutions saw fit to oust her.

At a meeting of the Board of Directors' Council on 10th July 1997, the Council members present, unanimously, decided not to renew the Insurance Ombudsman's contract.

But for one member of the Council, Mr. Bill Loughlin, who was not present at the meeting when the Board of Directors' Council unanimously decided not to renew Ms. Paulyn Marrinan-Quinn's contract, this was the final straw.

Mr. Loughlin decided to break with the customary acquiescent silence of the Board of Directors' Council.

On 5th February 1998, Mr. Loughlin issued a public letter that shed an explosive light on the functioning of the Insurance Ombudsman Scheme.

Mr. Loughlin's letter stated that the Insurance / Life Assurance Industry had been trying to manoeuvre the workings of the Office of the Ombudsman to ensure that its own interests remained paramount and that, having made his concerns about the problem with the scheme repeatedly known to the Council, the Board, the Insurance Federation and to individuals within the Insurance Industry ─── to no avail, he had no option but to resign from the Council.

The outrageous shenanigans brought to public attention by Mr. Loughlin's public letter were debated at length in both the Upper (The Senate) and Lower (The Dáil) Houses of the Irish Parliament. (See Appendix 2/4.)

In his public letter, Mr. Loughlin stated: 

"Paulyn has resisted this unrelenting bullying from the moment she took up her Office.  ......  The classic types of bully are featured on the Council and the Board which are in openly admitted collusion; their purpose being to control and subjugate, their methods thriving on secrecy. ......

Apart from the control of the Council by the Board already noted (in contravention of the very concept of their separate identities) and the control of the Ombudsman sought to be exercised by the Board (by withholding funds), there included the following :–

In August 1998, the Insurance / Life Assurance Industry's Board of Directors' Council appointed a new Insurance Ombudsman, Ms. Caroline Gill, also a barrister, and the former Chief Executive of the Consumer Association of Ireland.

As already related, following the Credit Institutions' Ombudsman's invoking of the covert 6 month preclusion clause within his Terms of Reference, I wrote to him again on 4^th March 1998 asking that he reconsider his stance with regard to our case and that he pursue our request for disclosure of the critical documentation I required from the First National Building Society.

But, by this time, the issues raised by Mr. Loughlin in his February 1998 letter (see above) had come to light through the public media, so I also set about seeking assistance and guidance from the Insurance Ombudsman, Ms. Paulyn Marrinan-Quinn.

While my efforts to exhort the assistance of the Credit Institutions' Ombudsman were ignored, the Insurance Ombudsman, Ms. Paulyn Marrinan-Quinn, was most helpful.

But even with the intervention of the Insurance Ombudsman, both Irish Life and First National frustrated and delayed the complete and truthful provision of the critical information requested by me.

I just could not get them to provide me with the most critical document, the 'Endowment versus Repayment' Mortgage Quotation (see Case 1 of Appendix 1/2) on which my decision to enter into an Endowment Mortgage contract had been based.


Bear in mind that the Insurance / Life Assurance Institutions' Board of Directors' Council had already decided not to renew Ms. Paulyn Marrinan-Quinn's contract and that she was to be replaced as Insurance Ombudsman by the end of August 1998!



It was only following from a direct written request by the Insurance Ombudsman to the Chief Operating Officer of Irish Life Assurance and from further specific clarifications requested by me on foot of same, that I finally, in October 1998, received the most critical document necessary to the formulation of my case, i.e. the 'Endowment versus Repayment' Mortgage Quotation presented to me at my pre-contract meeting with the First National Building Society. (See Section 1.2: The Experts’ Advice and Representations.)

NOTE! 

On 21^st September 1998, I submitted a completed Complaints Form to the Insurance Ombudsman, Ms. Caroline Gill.

The contention set down in our Complaints Form was that my wife and I were induced into choosing an Endowment Mortgage in preference to a Repayment Mortgage on foot of:-

No Legal Argument or Financial Analysis Argument was presented with the Complaints Form as submitted.


I clearly stated in the cover letter to the Complaints Form (and it was also clearly indicated within the Complaints Form itself) that it would take me some time to complete the full formulation of our Case and that I was submitting the Complaints Form in the belief that my doing so would enable the Insurance Ombudsman to progress to the 'investigation stage' of the Case.

On 2^nd November 1998, the Insurance Ombudsman wrote to me stating that 'she would be in contact with me should she require any further information.

BUT  ───  no such further information was requested by the Insurance Ombudsman.

Without any further inquiry to me in respect of substantiation of the many, what-should-have-been-alarming, contentions set down in our Complaints Form, the Insurance Ombudsman issued her Decision on 20^th April 1999, wherein she stated:

The Ombudsman Schemes

Ensuring Containment

In respect of both the Credit Institutions' Ombudsman Scheme and the Insurance Ombudsman Scheme, the Self Regulatory System for dealing with customers' / consumers' grievances was such that the individual customer / consumer had to present his case on a stand alone basis.

No information regarding what would constitute a breach of any of the Self Regulation Codes issued by the Financial Services Institutions, the Life Assurance Institutions, or the Insurance Institutions, was provided by the respective Ombudsman's Office to the complainant.

Nor was there any information provided by the respective Ombudsman's Office to the complainant regarding what would constitute a breach of Common Law or Statute Law by a Financial Services Institution, Life Assurance Institution, or Insurance Institution.

Nor, more importantly, was there any information regarding the Common Law duties of care and disclosure, incumbent upon such Institutions with respect to their dealings with customers / consumers, imparted by the Ombudsman's Office to the complainant.

Nor was the fact made known by the respective Ombudsman's Office to the complainant that, under the Common Law,  the burden of proof ─── that all material facts had been made known to him and that the contract he was entering into had to be to his advantage ─── rests with the Financial Services Institution, the Life Assurance Institution, or the Insurance Institution, as the case may be. (See Section 2.3.4: The Duty to Disclose and Silence as a Misrepresentation.)

Nor was there any process of discovery of documents incorporated within the respective Ombudsman Scheme. It was very difficult for a complainant to present a case when most of the critical and objective documentation on which the case would be based was in the possession of the Financial Services Institution, Life Assurance Institution, or Insurance Institution, againt whom he was making the complaint. Such critical and objective documentation would include the Quotation Examples, Product Brochures, etc., that had been used by the Financial Services Institution, Life Assurance Institution, or Insurance Institution, to induce the complainant to enter into a contract in the first place.

The individual customer / consumer had therefore to present his case to the Ombudsman from a state of ignorance, with no information whatsoever provided to him as to what was right or wrong in the matter of how the Financial Services Institution, Life Assurance Institution, or Insurance Institution, should have conducted itself in its dealings with him.

The Self Regulatory System, as applied through the Credit Institutions' Ombudsman Scheme and the Insurance Ombudsman Scheme, was therefore such that the Financial Services Institutions, the Life Assurance Institutions, and the Insurance Institutions, were able to successfully maintain their status quo of 'control and containment'.

By keeping the issues of complaint isolated to each individual, and by channelling these complaints towards their own Self Regulatory System, a system where they exerted direct control over the Terms of Reference and a controlling influence over what was to be approved and published in the Ombudsman's Annual Reports, the Financial Services Institutions, the Life Assurance Institutions, and the Insurance Institutions, were able to ensure that there would be no general awareness among customers / consumers / clients of 'what was going on?'.

They were also able to ensure that the systemic use of fraudulent misrepresentation, as the means by which customers / consumers / clients were induced to enter into contracts with them, would never come to the knowledge of the Prosecuting Authorities [the Office of the Director of Consumer Affairs (ODCA) and the Fraud Squad].

And if the substance of any issue of complaint from an isolated individual was such that it could, by the matter being taken to another level outside their control, expose any pervasive or systemic misrepresentations by which the Financial Services / Life Assurance / Insurance Institutions induced customers / consumers to enter into certain contracts, this potential exposure could be nipped in the bud, thus ensuring containment.

The cost of appeasing one such isolated individual was miniscule in comparison to the vast monetary rewards to be gained by channelling consumers towards products that, by their covertly syphoned commissions, were geared towards the personal enrichment of those within the Financial Services / Life Assurance / Insurance Institutions.

Note! In the case of Life Assurance and similar type investment products, such as Endowment Mortgages, the capacity for personal enrichment by the misrepresentation of such products was vast.

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:

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.)

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

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.