The Financial Services Ombudsman has said the stakes are high in a forthcoming court battle between his office and stockbroker Davy.
The Ombudsman, Joe Meade, ruled that Davy had sold unsuitable investment products for €500,000 to Enfield Credit Union in Co Meath.
That ruling has now been challenged and today the Ombudsman has posted all the details of the case on his website. As well as appealing the ruling, Davy is also challenging the constitutionality of the Ombudsman's powers.
Speaking on RTE's News at One, Mr Meade said the Davy challenge was aimed at, in effect, 'setting aside' his office. He said that if it succeeded, all of the consumer protection given to the financial services area following the scandals in the 1990s would be 'put at nought'.
In his ruling, Mr Meade held that the Enfield Credit Union was not informed of the real nature of its investment in three perpetual bonds. The Ombudsman said the bonds were 'at a level of risk which did not ensure security of capital' and were unsuitable for this credit union. He ordered Davy to pay the credit union €500,000 in exchange for the three bonds and to refund all fees and commissions.
Mr Meade told RTE the bonds were worth around €330,000 on the latest figures he had. He said he had been told that other credit unions may be lodging similar complaints, but he would look at each case on its merits.
Read the Ombudsman's decision here .
