EBS denies putting tied agents under pressure to push riskier investments
PRESSURE is alleged to have been put on tied agents of a building society to mis-sell unsuitable investment products to customers.
The allegations emerged in a High Court action where a firm called Betty Martin Financial Services (BMFS) is seeking to halt the termination of its tied agency agreement with EBS.
BMFS operates EBS branches in Lucan, Athlone and Longford, but its contract is set to be terminated next month. One of its directors, Declan Martin, claims the agreement was terminated after he refused to encourage customers to select unsuitable financial investments.
In proceedings before Mr Justice John Jordan, BMFS alleges an EBS regional manager, Tim Gleeson, asked it to undertake commercial activities that were “unprofessional, unethical and against Central Bank rules and guidelines”.
The allegations have been denied by EBS and Mr Gleeson. EBS has not disclosed the reasons for the termination of the agreement.
The court heard affidavits filed by other one-time EBS tied agents allege they too faced similar pressures and also had their agreements terminated.
Declan McGrath SC, for BMFS, said John McMahon, a former Garda detective chief superintendent, had examined the affidavits and concluded criminal offences may have been committed.
However, the court also heard that a 2017 audit by the special investigations unit of EBS’s parent company AIB found Mr Martin’s allegations were not substantiated.
In an affidavit, Mr Martin said he and his co-director sister Sheila Martin began “to have issues” with Mr Gleeson from 2010 on. He explained that customers seeking to open an account were required to complete a questionnaire to ensure they were directed towards appropriate products. Central Bank guidance ensures those who get a low score should only invest in low-risk accounts. Those with a higher score are allowed invest in riskier products.
According to Mr Martin, he was pressurised by Mr Gleeson to encourage customers to answer the questionnaire so as to score a higher risk rating and get them to invest in high-risk investments that EBS would have increased earnings from.
He said he recorded Mr Gleeson directing staff to mis-sell unsuitable products. A termination notice was served in May 2017, but was put on hold pending an audit, which did not uphold Mr Martin’s complaints about Mr Gleeson. Notice of termination was again issued in February last year and will expire next month.
The court heard Mr Gleeson took issue with everything Mr Martin and other tied agents have alleged. In an affidavit, he said Mr Martin had made unsubstantiated complaints which had been demonstrated to be untrue.
He also said he was unaware he was being recorded and believed what he had said was taken out of context.
The case continues.
He believed what he had said was taken out of context