Irish Life has disclosed that 21 sales staff have been dismissed for "gross misconduct" since 1993, as the life assurance group strenuously rejects allegations that management was aware of, participated in and assisted sales practices through which customers lost money. The allegations, made by an unnamed, former Irish Life employee, appear in today's Magill magazine. They have been dismissed as "simply not true" by Irish Life. Magill states that customers lost substantial amounts of money because of "churning" by sales teams and alleged that only customers who themselves discovered the abuses were compensated. Last night Irish Life insisted that "in any case where we have found that customers have been disadvantaged, because of inappropriate advice being given by our staff, we have restored them to the position they should have been in". The company also points out that it has dismissed 21 staff for not maintaining proper standards.
Chief operating officer Mr Denis Casey contended that the allegations came from "a self-confessed fraudster and crook who - if his testimony is truthful -defrauded Irish Life, as well as our customers". Mr Casey insisted that activities on the scale alleged "simply could not be true" because of the procedures and checks the group has in place over sales.
The group "never has and never will tolerate cases of mis-selling to customers", he said. Irish Life was accused of failing to halt mis-selling practices when they were discovered and of continuing to process policy changes in 1994, even though management had concluded that in a review of 644 cases in the first half of that year the customers concerned were worse off in all cases. Mr Casey insisted that the group always took action on misselling. On the processing of the policies referred to, he argued that some 30 policies were involved and the cases were not "black and white".
In his statement to Magill, the former Irish Life employee alleged that he was shown the procedure for "churning" - replacing customer's existing life policies with new policies for the sole purpose of generating commission for the sales team - when he joined Irish Life. He alleged that the system involved the sales representatives, in association with the sales development manager or the area sales manager, scrutinising the list of policy holders at a branch for suitable policies to churn.
Mr Casey insisted that the practices alleged were "simply not possible" on the scale alleged because of the group's policing procedures and its insistence on the quality as well as the quantity of business in determining the rewards for sales staff. It was alleged that industrial branch policies - where less well off customers pay premiums on a weekly basis - would be targeted for churning. At that time some 90 per cent of first year premium payments could be paid in commission to sales staff. In cases of more affluent customers paying large premiums, he alleged that policies were churned in two ways: the premium on the existing policy was reduced to the minimum level and balance was diverted into a new policy, or, the existing policy was frozen and payments were diverted into a new policy.
