The case against Irish Life is very simple. An internal memorandum addressed to the sales force operating in a large part of the country, dated March 1992 and signed by Mr Gerry Rooney, regional manager (North), stated: "Over the past number of years a number of staff have persisted in surrendering policies in full and replacing them with a similar type contract, when in fact it would be in the best interest of the client to take full or part encashment and continue with the existing policy".
The memorandum continued: "Surrendering a policy and replacing it with a similar type contract is not in the best interest of the client even if the client request this."
The significance of this document is the acknowledgment (a) that this practice is "not in the best interest of the client" and (b) that the practice had been "persisted" with "over the past number of years". This means that, on the basis of this document alone, the practice had been going on at the very least for two years, from the beginning of the 1990s.
The practice involved was the encouraging of clients to cash in an existing policy and to take out a new policy or to reduce premiums on an existing policy and take out a new policy. The effect of this was to divert the entire premium for the first year to sales commission. The customer effectively lost the entire premium for the year in question.
By March 1992 at least, Irish Life management was thus fully aware its customers were being ripped off. If one were to believe Irish Life's recent protestations, once it became aware customers were being ripped off it (i) dismissed the sales staff responsible; (ii) compensated the customers; and (iii) made absolutely certain the practice stopped there and then.
Not a bit of it.
Another internal memorandum, dated April 1994, more than two years later, makes it obvious that the practice, which was ripping off Irish Life customers, not alone had not been stopped but was now rife in the company.
This April 1994 memorandum to the sales staff was from Mr Willie Holmes, general manger (Field). It states in its first sentence: "There has been an increase in the number of requests for a reduction in premiums for existing policies". It goes on to explain: "Reducing a premium on an existing policy, coupled with effecting a new policy, can really only be justified in exceptional circumstances and in most cases the inevitable conclusion, therefore, is that the change is for commission gain only".
But even then a halt was not called to this scam. It went on apace for at least several months.
On June 10th, 1994, Mr Gerry Hassett of Irish Life management sent a memorandum to Mr Holmes in which he states that in the first six months of 1994 "we had 805 cases where a policy has been surrendered in favour of a new policy". He continued: "In 80 per cent of cases, the existing case (usually a LifeSaver) was surrendered in favour of a new Life Protector . . . in all cases the customer is much worse off".
On June 20th, 1994, in another memorandum from Mr Willie Holmes to area managers, reference is made to a technical analysis undertaken by actuaries for Irish Life on six cases picked at random. The memorandum states: "In every case examined the change [from one policy to another] was not in the best interest of the customer. They lost out in money terms at every date and at all growth rates [the actuaries] examined".
Irish Life has made a big deal about how solicitous it has been in compensating customers for any mis-selling that occurred. On the basis of those protestations one might have expected it to have identified all the thousands of customers who had been conned into cashing in policies and opening new policies over the years. At the very minimum one would have expected Irish Life to compensate these six customers who had been specifically identified as having been ripped off.
Of these six customers whose cases were examined by Irish Life actuaries in June 1994, and who were found to have "lost out in money terms at every date and at all growth rates examined", in at least five of these six cases not only was no compensation made but the company didn't even bother to make contact with the customer (we do not know what happened in the sixth case).
As for the claim that sales staffs were disciplined for the rip-offs perpetrated on customers prior to July 1994, a big deal was made of the "revelation" that 21 sales staff were dismissed since 1993 for "gross misconduct" - the claims are entirely bogus. Nobody was dismissed for this rip-off of customers at least prior to July 1994. An internal memorandum dated July 1994 and again signed by Mr Holmes refers to "guidelines" which had been brought into effect on July 15th, 1994. This stated: "No premium reductions or surrenders which are coupled with a new policy will be allowed". The memorandum explained: "The reason for this procedure is simply that a premium reduction coupled with a new policy is not in the customers' interest".
But then amazingly, this memorandum goes on to state: "In the interim we have agreed to allow all premium reductions in the pipelines to be processed".
So, having acknowledged categorically the practice was a rip-off of customers and had to be stopped, it was saying rip-offs in the pipeline would be allowed.
How, given that explicit sanction for the practice that was at all times against the interests of the customers, could Irish Life management have justified sacking even the worst of the offenders on the sales staff for doing the same? And the fact is that nobody - not a single member of the sales staff - was dismissed for the practice.
Quite brilliantly, Irish Life has managed to obscure the simple case against it but it has doggedly avoided answering simple questions about what went on.
The simple questions are:
How many instances have there been of policies being encashed and replaced by new policies since 1983?
How many instances have there been of premium reductions coupled with the opening of new policies since 1983?
How could practices that were identified in March 1992 as being against the interests of customers be allowed to persist at least until July 1994?
What conceivable justification was there for processing policy reductions in the pipeline, coupled with the opening of new policies, when it was clearly acknowledged that this was against the interests of the customers concerned?
Why were at least five of the six customers who had been specifically identified as having been disadvantaged in June 1994 not compensated or even contacted?
Was there even a single sales person who was dismissed simply for the mis-selling referred to prior to July 1994?