Most customers take up ACC offer in 'mis-selling' action
THE overwhelming majority of people offered compensation by ACC Bank over alleged mis-selling have signed up for the deal, the Irish Independent has learned.
Five-hundred cases in which customers sued over 'low-risk' investments that the banks had allegedly promoted were settled at the Commercial Court last month.
The customers claimed that they lost money after borrowing from ACC to invest in various 'Solidworld' tracker bonds in 2003 and 2004.
Neither the bank nor solicitors Lavelle Colman, who represented the customers, would comment on the extent of the settlement. However, it has been reported to be in the region of €13m.
It is understood that a small number of people have yet to agree to the deal. The Central Bank has said it is monitoring the settlement in its role as financial services regulator.
Four test cases brought by investors in the bonds opened at the Four Courts in early November, but the issue was adjourned to allow for talks between the parties.
When the case opened, the court was told that the bond schemes were very popular among Irish investors in 2003 and 2004, with an estimated €650m worth of geared tracker bonds sold to more than 1,000 people who borrowed an average of €200,000 from ACC.
Most investors took out loans with ACC to buy the bonds and the losses they suffered arose out of interest repayments on those loans, it was claimed.
ACC Bank marketed borrow-to-invest tracker bonds as "low risk" to Irish customers, despite being aware of concerns by the Financial Regulator, actuaries and within the bank itself about such products, the court heard.
It was one of the biggest cases to ever go before the courts where multiple parties have come together to sue over a financial product.
The case was making headlines in the Netherlands where ACC's parent bank is a major financial institution.
John Gordon, on behalf of the investors, told the court during the case that ACC staff were told to "flatter" customers that they were regarded as high-net-worth persons and were being offered "exclusive entry to a private club".
Investors were told that there was "nothing to worry about", the bonds were "a fantastic product" and the bank would lend them the money to make the investment. Most investors had a low-risk investment appetite and their complaint was that ACC mis-sold the bonds as low risk when they were in reality high risk, he said.