Friends First is to remove a director from the board of one of its companies who was disqualified by the Financial Regulator last December.
Stephen Donnelly, a former Friends First employee and then independent broker, was disqualified by the Financial Regulator from the provision of financial services after a complaint by an investor.
Richard Bruton, Fine Gael
At this time Mr Donnelly agreed to relinquish the intermediary licence of his company MIS. Financial Services Limited.
But it emerged today that, despite Friends First's knowing of the fraud for over two years, Mr Donnelly still sits as a director on the board of Arley Limited. Arley Limited is a company established by Friends First and Mr Donnelly sits on the board alongside two senior Friends First executives.
In a statement Friends First said that there has been no meeting of the board of Arley since the decision of the Financial Regulator in December 2006, however at the next scheduled meeting of the Arley Board later this month, Friends First "will table a resolution that this individual be removed in accordance with the internal rules of the company."
Friend's First also pointed out they fully investigated the complaint from an investor, which eventually led to Mr Donnelly's disqualification.
"In April 2005 on the basis of what we had found during our investigation we terminated the agency of the Intermediary MIS Financial Services. On the same day we notified the Financial Regulator of this action and our reasons for taking it.
Fine Gael Deputy Leader and finance spokesman Richard Bruton is requesting a report on the incident from the Financial Regulator.
Deputy Bruton said the case demonstrates that the Irish financial services sector is only playing catch-up with consumer protections.
"This is a very disturbing report which seriously challenges the robustness of consumer protection. Ordinary citizens deal in good faith with financial institutions and their employees or agents but as it appears in this case, they can also suffer serious financial loss with no proper protection," he said.
Mr Bruton added it appears that a company is able walk way from its responsibilities and hide behind the barriers of High Court expenses.
"It is alarming that no system of bonding or insurance cover was in place to ensure that the consumer did not become the victim of illegal activities by employees or agents."
Friend's First concluded: "Since February 2005, Friends First has engaged in detailed analysis of the complaint and entered into continued correspondence with the complainant and his legal advisors. We are satisfied that the policyholder has suffered no loss."