NIB customers charged total of 9% in commission fees on CMI scheme

Customers depositing funds in the controversial overseas investment scheme marketed by National Irish Bank (NIB) were charged commission fees of 9 per cent, Labour Party finance spokesman, Mr Derek McDowell claimed last night.

As the Revenue Commissioners and the Central Bank conduct parallel investigations into the scheme, Mr McDowell cited NIB documentation which he claimed raised new questions about the purposes of its operation of the scheme.

He said guidance given to customers by advisers for the bank emphasised anonymity and confidentiality as the main advantages of the scheme, which involved the sale of Clerical Medical Investment offshore investment bonds.

The documents he had seen, he added, disclosed that customers were charged handling costs of 1 per cent of the initial capital investment and a further 1.6 per cent a year for five years, amounting to a total of 9 per cent of the original investment.

Mr McDowell said the high charges involved suggested the only benefit of being involved in the scheme was anonymity.

Set-up charges on life assurance investment funds are usually in the region of 5 per cent. In addition, there is usually an annual management charge.

An NIB spokesman declined to comment last night. It is understood that NIB's own investigation is a wide-ranging one and includes an examination of the details of all clients involved and the origins of their relationship with the bank.

The bonds at the centre of the controversy were sold by staff in the NIB financial services division from 1992. CMI paid commission to NIB equal to 4 per cent of business secured.