Irish Life have taken it upon themselves to provide information regarding the Endowment Mortgage, the Repayment Mortgage, and the Comparison between these Mortgages.


They intend and allow that information to be conveyed, by various parties who are in the business of providing Mortgages and ‘Giving Advice’, to the individual consumer seeking a Mortgage.


These various parties obviously include First National (their tied agent) and other agents who, though not specifically tied to Irish Life, would be deemed to act within Irish Life’s authority of agency. But they also include the many independent financial advisers who do not act as agents for Irish Life, but to whom Irish Life provide such information.


It is reasonably to be expected that such Mortgage Information would be conveyed to the individual consumer seeking a Mortgage and that the consumer will place reliance on that information. Irish Life know, or they should know, that such is the case.

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Even though the individual consumer seeking a Mortgage has acted through an independent financial adviser, Irish Life will be held to have represented ‘the Mortgage Information provided by them’ to that consumer. There will have been an assumption of responsibility by Irish Life with respect to the positive representations they have made.


The individual consumer seeking a mortgage is a person to whom Irish Life intended that the information provided in their Mortgage Quotation Comparison be conveyed.


Therefore, in respect of the positive representations they have made, the matters of Fraudulent Misrepresentation, Negligent Misrepresentation and Statutory Misrepresentation, as discussed in Section 9.6.4 and Section 9.6.5 in relation to the Endowment Mortgage Contract entered into by my wife and I, also apply to the case of the individual consumer who enters into an Endowment Contract with Irish Life on foot of information provided by them through an independent financial adviser.


(See Section 2.3.1: The Conditions Necessary for the Existence of Misrepresentation. See also Section 2.7: The Effect of Agency.)

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The question also arises whether Irish Life’s failure to disclose, the various matters relating to Risk and Reward for Risk taken (see Section 9.6.1), constitutes Misrepresentation in the case where an individual consumer enters into an Endowment Mortgage Contract with them, following from advice given, and representations made, by an independent financial adviser.


It would appear that, while the Mortgage Information provided by Irish Life through the independent financial adviser gives rise to a duty of care with respect to the positive representations they have made, a duty to disclose does not necessarily follow from that duty of care, i.e. it is a ‘limited’ duty of care. It is the independent financial adviser who has assumed this duty of care responsibility of disclosure (this is discussed below).


However, while Irish Life, in this particular instance, may not be burdened with a duty to disclose following from their duty of care, they are under a duty to disclose by virtue of the Utmost Good Faith nature of the Contract. (Remember an Uberimma Fides duty to disclose is an express duty of Law !) Their failure to disclose such material facts (i.e. Risk, and the Reward for Risk taken) will therefore constitute Misrepresentation.


Of much greater importance, however, is the fact that Irish Life’s silence, on the various matters relating to Risk and to Reward for Risk taken, constitutes Fraudulent Misrepresentation —— because they have conscious knowledge that their silence on these matters totally distorts the positive representations they have made.

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We have, above, addressed the issue of the liabilities Irish Life have towards the individual consumer who has acted through an independent financial adviser. (See also Note! below.) But it must be remembered that these liabilities are in addition to the liabilities of the independent financial adviser himself.

The independent financial adviser, in Giving Advice, is himself in a fiduciary position relative to the individual consumer. He therefore owes the consumer a duty of care.

This duty of care carries with it the assumed responsibility to fully disclose AND explain all matters relating to the Mortgage Contract.

This duty of care burdens him with acting in the individual consumer’s interest.

The independent financial adviser also puts himself forward as an expert in his own right on financial matters relating to the ‘consumer’.

He too will be required to show honest belief that the facts he represented were true.

If he is not an expert, he will have misrepresented himself as such.

If he is an expert, he will have failed to apply his expertise and make a proper inquiry into the truth of the representations made by the Life Assurance Company.


The consumer is entitled to place reliance both on him, by virtue of the fiduciary nature of his position, and on the Life Assurance Company by reason of their assumed responsibility for their representations.


The independent financial adviser may also have gotten reward, by condoning or tacitly approving the representations made by the Life Assurance Company, in justifying his recommendation of the Life Assurance Company’s investment product, this reward / commission from the Life Assurance Company, in addition to any fee he may have charged his client.

In such circumstances, he cannot justly contend that his reliance on the representations of the Life Assurance Company constitutes reasonable grounds for his believing that the facts he represented were true.

                                     
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NOTE ! You will recall, when previously discussing ‘Commission and the Independent Intermediary’ under the LAUTRO Rules (see IMPORTANT NOTE under the LAUTRO Rules in Appendix 2/1), where we contended that it was reasonable to conclude that, by their paying commission to an independent intermediary for the Giving of Advice to the consumer / investor, the Life Assurance Company / Financial Institution owes a duty of care to the consumer / investor with respect to ratifying that the independent intermediary carries professional indemnity cover.


Were such not to be the case would encourage deceptive practice.


IF the consumer / investor suffers a loss as a result of negligent advice given by an independent intermediary / independent adviser, in a situation where the independent intermediary / adviser has been paid a commission by the Life Assurance Company / Financial Institution, and the intermediary / adviser is subsequently found not to have been covered by professional indemnity insurance, THEN the Life Assurance Company / Financial Institution cannot distance themselves from the fact that it was they who paid for the Giving of Advice. For, in such circumstances, the Financial Institution could hardly, in Equity, be said to have ‘clean hands’.