I have a question which the Minister of State might put to his officials. When this legislation was introduced some months ago, we were not aware of what we have been made aware of in the past two weeks. Yesterday we heard a statement by the former managing director of AIB, Mr. Scanlan, who said that his wife had made a substantial investment in 1989 and passed it to Allied Irish Banks Investment Managers. He and his wife subsequently added to the investment. Mr. Scanlan's statement said he could take legal action but would not do so because of his good relationship with the bank. I assume Mr. Scanlan's wife was not an employee of the bank but simply a customer, despite being related to the chief executive of the bank by marriage. What is the situation now? Is she entitled to make a complaint? She entrusted money to AIBIM and it ended up in the Virgin Islands. They have only found this out now, many years after the investment was made and many years after it was repaid with an extraordinary amount of growth — it was a very lucky investment for them. Mr. Scanlan's wife would not rank as an employee but as a customer. If Mrs. Scanlan is faced with questions from the tax authorities, under this legislation she is effectively disbarred on a time basis and may also be disbarred because there have been proceedings before a court or tribunal.
I do not have a problem with what is suggested by the Minister in regard to ordinary, everyday cases. However, I have a problem with the independence of the financial services ombudsman. We have heard in recent months and will hear more of a number of people who were persuaded by dint of advertisements in banks or the persuasiveness of bank staff that they should put their money into overseas deposits and sign up as non-residents. The point they are making is that they did this, like Mr. Scanlan and his wife, on the advice of this very powerful institution, the bank. In most cases, they appear to have been non-compliant and in the wrong from a tax point of view. Some time later, the Revenue Commissioners correctly sought an appropriate sorting out of their tax positions.
This legislation would copper-fasten the banks from having to answer to individual customers. In other words, as with AIB, a bank could make a settlement with the State. However, this would not be the case for individual customers, who in their tens of thousands of cases were misdirected by unknown persons, perhaps bank counter clerks but not the directors, to put their money into bogus non-resident accounts or vehicles in the Virgin Islands. They have no recourse under this legislation to the financial services ombudsman.
While I accept that in regard to banking the primary advice must be caveat emptor and that people are responsible for their own financial decisions and investments, nonetheless, there is a significant disproportion in terms of power in this regard. On one side is a very large bank with over 20,000 employees all straining to one purpose — to make money and sell products — and, on the other, individual customers who may not be particularly knowledgeable in this area but who want to make as much money as possible. The bank acts as a salesperson for schemes which may be dubious from a tax perspective while the customer is anxious to earn significant returns. However, the schemes have gone belly-up for many people, including many of the elderly who feel they were at the least mis-advised or misled by the banks. We witnessed yesterday the outrage of Mr. Scanlan, the chief executive of the bank, on behalf of his poor wife who put her money into AIBIM only for it to end up in the Virgin Islands. They are also without recourse.
This is one of the reasons I suggested that this legislation needs more thought. It contains a financial services ombudsman structure designed by the banks to channel run of the mill complaints, for which the legislation will be fine. However, when there is extraordinary behaviour by a powerful organisation such as a bank, its customers are reduced to single individuals and their right of complaint is severely constrained. In the context of fairness and equity, there is an imbalance in favour of the banks as institutions and against the rights of individual customers. This also applies to business people who may be negotiating loans, and we heard from Ms Dowling about the practice of the negotiation of insurance policies where top-up loans are involved. In the context of what we have heard over the past few weeks, this legislation seems fine for the simple, straightforward cases but not for the kind of activity that our banks, our biggest bank in particular, seem to be heavily involved in.
