THE Irish Brokers Association (IBA) which regulates investment intermediaries such as the Taylor group, has said that it has no voluntary compensation scheme for people who lose money when their funds are mishandled.
Meanwhile, the Minister of State at the Department of Enterprise and Employment, Mr Pat Rabbitte, said last night that if he had not heard of the complaints about Taylor Asset Managers from the UK regulator, it was unlikely the IBA would have told him. Mr Rabbitte met the IBA for two hours yesterday to discuss its handling of the controversy.
An IBA spokesman admitted that the IBA, which has been refusing to divulge details of its operations, has no such compensation scheme. Members only have a £50,000 bond in place, but some do have indemnity insurance. It is not clear whether such insurance had been taken out by Tony Taylor, the managing director of Taylor Asset Managers, who has left the country.
A liquidator has been appointed to the company and clients have lost in excess of £1.5 million.
It has also emerged that the IBA said it would only forward documents regarding a complaint it had received to a Department of Enterprise and Employment official if the Department would indemnify it from any liability for doing so and put a request in writing.
It is understood that the IBA is reluctant to comment because there is a Supreme Court appeal pending on a £500,000 award it was ordered to pay a member company for defamation. It is. also understood that the Department has never given the IBA any indemnity assurances.
Mr Rabbitte said last night: "Given the IBA's own argument about legal constraints, it follows that if the UK regulator had not brought the matter to our attention the IBA would have been unlikely to have done so."
He said he had felt there was an obligation on the IBA, as the approved representative body with responsibility to regulate certain investment business firms, "to put the Department in possession of complaints of this.a order immediately".
In a lengthy statement last night, the IBA said it welcomed, the fact that Mr Rabbitte had used his wide ranging powers to conduct an investigation. These powers were not available to the IBA, it said.
The IBA also said it acted responsibly and swiftly at all times and with due regard to the "legal constraints" under which it acts.
Mr Rabbitte has said he is carrying out a fundamental review of the way the investment intermediaries sector is regulated. He is also understood to be seeking legal advice about the "legal constraints" under which the IBA says it is operating.
Mr Rabbitte believes he should not have had to appoint authorised officers to get the information requested from the IBA.
The IBA said yesterday that it had been advised by Tony Taylor's solicitors that one of the complaints was defamatory and that it had first received a complaint on July 18th, but had informed Mr Rabbitte on May 21st that it had received informal and confidential information on the allegations.
On July 30th, the IBA had written to the complainants - it had previously received two other separate complaints "of a run of the mill character" - advising them to make the Department of Enterprise and Employment aware of the situation.
Mr Rabbitte appointed an authorised officer to investigate Taylor Asset Managers on July 29th.
The IBA said the complainants chose not to forward their complaints to the Department. The IBA told Mr Rabbitte that there were no other complaints about any member company.
Department officials and the IBA will meet again later this week to review the situation.
Meanwhile, it is unlikely that two cases in which investors are seeking discovery of documents in the Masters Court today will now proceed.
In a separate development, the provisional liquidator, Mr Paddy McSwiney, is expected to have his appointment confirmed in the High Court tomorrow.