IRISH Life may be facing court challenges in Britain over alleged irregularities in methods of selling pension products after a landmark court decision cleared the way for dissatisfied investors to sue pensions companies directly.
The High Court in Bristol yesterday rejected an application by five life assurance companies - including Irish Life - that would have compelled people who believe they were mis-sold pensions products to wait for the outcome of the industry's own review process before seeking compensation through the courts. The court also refused the five companies leave to appeal the judgement.
So far, Irish Life has only been served with one writ alleging sales irregularities in pensions products, but Mr Robert Wharton of solicitors Ringrose Wharton - which is acting for the complainants involved in yesterday's case - said he has four letters of complaint against Irish Life on which writs have not yet been served. Mr Wharton expected to move quickly on the complaints, adding: "Our job is to get a result for our clients as soon as possible".
A spokesman for Irish Life said the number of complaints it had received about sales methods in Britain was "insignificant" in terms of the group's British business and "minimal compared to the size of the market". He added that Irish Life - in line with the recommendation of the Personal Investment Authority - was carrying out a review of all 30,000 pensions which the group sold in Britain between 1988 and 1994 with the aim of identifying "particular cases of difficulty" and where there were concerns "about advice that may not have been appropriate".
The Personal Investment Authority has set a timescale for various aspects of this review by the industry to be completed and Irish Life aims to have dealt with priority cases by the end of 1997.
"The spokesman rejected suggestions of untoward delays in completing the review, stating that a full review of all 30,000 pensions sold between 1988 and 1994 was "a major undertaking". Irish Life has made full provision against the complaints, he added.
The court ruling yesterday involved complaints from members of two trade unions, the Royal College of Nursing and the GMB against five companies - Prudential, GAN, TSB Pensions, Hill Samuel Life and Irish Life - but it is expected to trigger a flood of court actions from individual pension holders dissatisfied with the pace of the industry's own review.
The Irish Life spokesman said the companies had opposed the action taken by Ringrose Wharton because it might result in people "jumping the queue" by taking their complaint about alleged selling irregularities through the courts instead of through the industry's review system.
In late 1994, Irish Life was levied fines, costs and compensation of £500,000 by LAUTRO for serious breaches of the rules covering life assurance companies in Britain. That fine was one of the highest against a life assurance company in Britain, particularly given the size of Irish Life's British market share.
The Prudential, one of the five pension companies involved in yesterday's case and one of the biggest pensions providers in Britain, said it was "very disappointed" at the outcome. "We will consider the judgment in some detail before deciding whether to appeal."
The Prudential said it remained concerned that if a large number of investors decided to issue legal proceedings against pension companies, resources would have to be diverted to fight the cases.
Trade Unions, including the GMB, will now press ahead with claims for compensation on behalf of workers, mainly local authority employees who were advised to leave council schemes in the 1980s and take up private pensions.
Mr Bill Day, the GMB's pensions officer said he was delighted with today's decision. "Thousands were mis-sold personal pensions by the big insurers - they have a right to have their cases heard in court.
The GMB said the 50 workers involved in yesterday's case were due £1 million compensation.
