Safety of client funds unclear as broker closes

A Limerick  insurance brokerage whose principal claims to be among the foremost financial advisers in Ireland has ceased trading, after the Central Bank suspended its operations earlier this month.

The Central Bank said it could not provide an answer yesterday when asked whether client funds held in BT Insurances were safe.

This raises questions about the safety of client funds because the Bank stated immediately in two previous voluntary revocation cases that there was no risk to client funds.

The Central Bank advised clients of the company - which is based at Mallow Street, Limerick - to contact the issuers of their insurance policies or to phone Ms Karen A O'Leary in the Bank at lo-call 1890-200469.

Finbarr O. Tobin, which trades as BT Insurance, is owned by Mr Barry Tobin. He did not return a telephone call to his office yesterday.

The BT Insurance website claims the company is one of the longest established in the Limerick region and claims to negotiate "unique special discount rates" on many insurance and investment plans.

The website claims Mr Tobin is "one of Ireland's foremost advisers on life and pensions and general insurance".

Because the firm is not registered in the Companies Office, no information about its financial performance is publicly available.

In a direction that is believed to have followed a routine inspection carried out in recent months, the Central Bank ordered the company to immediately suspend its operations on January 10th.

Earlier this week, BT Insurances sought a voluntary revocation of its licence under the terms of the Investment Intermediaries Act.

This is an option open to intermediaries when the Central Bank makes it clear that it will seek High Court approval to close down a company.

A Central Bank spokesman said he was not free to state why the licence had been suspended. But he added: "These are things the Bank does not take lightly."

When asked whether client funds were safe, the spokesman said: "I am unable to answer that question at this stage."

The BT Insurance website indicates that five people were employed by the company. According to the bank, Mr Tobin was authorised by the Central Bank to advise on products offered by 17 producers.

These were: Allianz Ireland; ARB Underwriting; Axa Insurance; Caledonian Life; Eagle Star Insurance; Eagle Star Life Assurance; Friends First Life Assurance; Hibernian General Insurance; Hibernian Life & Pensions; Irish Life Assurance; New Ireland Assurance; O'Brien Finlay Insurance Associates; Royal Sun & Alliance; Scottish Mutual; Scottish Provident; Standard Life Assurance; and Tyser & Co.

The company is the third to seek voluntary revocation since April 2001, when the Central Bank assumed responsibility for the regulation of intermediaries.

The first was the well-known Dublin firm, National Deposit Brokers, which sought revocation last July after the emergence of what the Central Bank described as "serious regulatory issues".

A document lodged in the Companies Registration Office that month by the firm's auditor, Hogan & Associates, said National Deposit Brokers contravened section 202 of the Companies Act by failing to cause proper books of account to be kept. Last October, the Dublin firm Noel Fitzpatrick & Associates sought voluntary revocation amid a Central Bank investigation into its business relationship with product producers.