TWO years after the flotation of the Irish Permanent on the stock exchange, the Ombudsman for the Credit Institutions is still getting complaints from Irish Permanent members, the majority of them women, who were unable to claim their free shares because they were not the first named on the relevant account.

The Building Societies Act 1989 (Section 16) stipulates that only the first named on an account can avail of the free share offer. Widows in particular, were disenfranchised because they did not remove their late husbands names from their joint account, something the Ombudsman, Mr Gerry Murphy, describes as "grossly unfair".

"In my report last year I suggested that the Act be amended to address this in-built unfairness. I am glad to note that in October 1996 it was announced that a section would be included in the Central Bank Bill 1996 to prevent this wrong occurring in any future flotations."

Meanwhile, the number of complaints to the Ombudsman dropped by a fraction, from 1,000 to the 12 months ending September 30th, 1995, to 996 this year. Half the complaints had to do with lending and mortgages and nearly a quarter with the operation of accounts. Eight per cent of complaints concerned investments, a figure that has doubled since the Ombudsman's first year of operation. The majority of cases (721) were settled through internal complaints procedures and of the 275 cases fully investigated, the Ombudsman found in favour of the complainant in 109 cases.

Successful complainants included a couple who were told by their building society that it would cost them £2,000 to redeem a fixed-rate mortgage. They successfully argued that they were unaware of the penalty clause attached to fixed rate contracts - in this case that clause was inadvertently missing from their contract. In another case the Ombudsman found in favour of a couple who had, four years earlier, instructed their building society to transfer from an endowment to an annuity mortgage. Although the society agreed to do so, the Deed of Variation, which the society's solicitors claimed was dispatched was never received by the complainants. Four years later, the couple discovered that the endowment was still in place and that they had only been paying interest on their loan, with no reduction in capital.

The building society claimed that the couple should have realised that they were still paying the same sum as before, but the Ombudsman found that the society was guilty of maladministration, - should bear the full cost of correcting the situation and pay £2,000 to the complainants by way of crediting their mortgage account.

One case that highlights the Consumer Association's recent complaints about loan insurance involved a woman who took a £10,000 loan from her bank, repayable over five years. At the end of the first 12 months she discovered that the loan amount had increased by £1,200, said to represent the insurance premium to cover the loan for the five years.

She complained, successfully, that the bank failed to explain that the cost of the premium would be added onto the loan. The Ombudsman found that the standard letter she received after applying for the loan stated that the £10,000 would be advanced "by way of a term loan plus PPP"

The letters, which the Ombudsman assumed meant Protection Plan Premium, were not explained and there was no reference to insurance in any correspondence between the bank and customer. He awarded her £1,200 and directed the bank to accept the assignment of a life policy which the customer had originally offered to the bank when she first took the loan.