A Co Kildare couple have settled their High Court action against the Financial Services Ombudsman over his decision to reject their complaint over the manner in which an investment product was sold to them by First Active.
The High Court heard that in March 2008 William Sexton (aged 62) and his partner Mary McHugh (aged 62) made a complaint over their €2.5m investment in a First Active product known as a Protected Portfolio Investment Bond. First Active has since been taken over by Ulster Bank.
They claim they made it clear to First Active before entering that investment, in March 2006, that they did not want to invest in a tracker bond, which is a fixed-term investment where typically the bulk of the money is invested in a deposit based account and the rest is invested in the stock market.
They also made it clear that they wanted to invest for a period of five years only, however the investment was for a period of five years and 11 months. They claimed that their wishes were not adhered to by First Active.
The couple of Cornelscourt, Newbridge, Co Kildare were unhappy at this and made a complaint to the Financial Services Ombudsman.
In February 2010 the FSO found no evidence that First Active were informed by the couple that they wished to avoid investing in a tracker bond, and further rejected the bulk of their claim.
As a result, the couple brought High Court proceedings aimed at setting aside the FSO decision of February 2010.
In their statement of opposition, both the FSO and First Active denied any wrongdoing and rejected the couple's claims. It was also rejected that the investment product was a tracker bond.
The court heard that although the product did not yield any return, they did not lose any of their initial €2.5m investment. Today, following discussions between the parties the President of the High Court Mr Justice Nicholas Kearns was informed that the matter had been resolved. No terms of the settlement were revealed in open court.
Opening the case Jonathon Kilfeather SC for the couple said the FSO's made "serious and significant errors", in rejecting the grounds of complaint. He said the complaint contained 11 separate grounds.
These included that the couple had not been afforded an opportunity to thoroughly examine the investment literature before the investment being made and that certain documentation was not made available and that the couple did not receive certain documentation, were made to the FSO, only one relating had been upheld.
Counsel said that the FSO's decision was flawed on grounds including that the FSO had relied on a fact-find document from First Active which it is claimed did not accurately record a number of meeting held between the couple and First Active prior to the investment being made.
Counsel said that it beggared belief that this document could have been relied on by the FSO in its determination.
Counsel said his clients run the family farm and a taxi business. A number of years ago part of the farm was sold for €5m and they decided to invest part of the proceeds of that sale with First Active.
Counsel said that they made their conditions known to First Active. Mr Sexton said in an affidavit to the court that investing in a tracker bond was like "putting a boat in the ocean with nobody to man it and it would be lucky if it came back".