Guide to CMI
What were Clerical Medical International personal portfolios?
Clerical Medical International (CMI) personal portfolios were a type of financial product marketed by NIB from the early 1990s for Isle Of Man-based CMI. The former head of NIB's financial services division, Mr Nigel D'Arcy, told the High Court in March 2001 that the product was really designed for non-residents.
How did they work?
You gave your money to CMI and could express a view as to how the money was to be invested in the portfolio of investment options on offer. The attractions of the product were described as being security of capital invested, accessibility for encashment purposes, the provision of death benefit, and "the ability of the policyholder to defray tax liabilities" that might accrue.
So, what's the problem?
The product was not an appropriate one for Irish residents. Irish residents should pay DIRT on money they have on deposit. As well as the CMI product, NIB was also offering similar products from Scottish Provident International, on the Isle of Man, and Old Mutual, on Guernsey.
So? Lots of people have offshore accounts.
The problem is that a lot of the NIB customers who invested in these products opted to have their "investment" essentially left on deposit by CMI with their NIB branch. The money would be on deposit under the name of CMI yet the customer could make a withdrawal any time he or she wanted to.
What was in this for NIB?
They got commissions on each portfolio taken out by one of their customers, plus they would not have to suffer any loss to their deposit base.
So how big was this?
Big enough. Approximately 470 NIB customers bought CMI or similar products, investing in the region of £62 million. They are all now known to the Revenue and many if not most of them have made settlements.
Hasn't the bank been helping people make these settlements?
Yes, it has. NIB marketed the products on the basis that the gains arising were tax-free, whereas in fact from 1993 Irish residents had to pay capital gains tax on investment income. Some former investors took proceedings against the bank, and the bank, in the hope of avoiding scores of suits for damages, offered to assist customers in paying their tax bills, in return for commitments not to sue.
