A court in the North has found that AIB and its investment arm engaged in “negligent misrepresentation” of the terms of an investment product sold to Donegal Cllr Frank McBrearty jnr and his wife.
The couple had invested more than half of the €1.5 million compensation Mr McBrearty received from the Irish State with the bank.
A judgment released by the Northern Ireland Courts Service and carried in today's Irish Times shows Mr McBrearty and his wife Patricia, and the defendants in the case AIB Group PLC, trading as First Trust Bank and First Trust Independent Financial Advisers Limited, brought writs against each other in this case in 2009.
The couple had €800,000 to invest, however a loan of €675,000 from the bank allowed them to increase that figure to €1 million. In addition the bank gave an “inducement” of €80,000, bringing the fund to €1.08 million, which was invested in an offshore investment.
Some €700,000 was invested in two “guaranteed” funds in 2006 with the balance put into a “low to medium risk” fund.
The Mc Breartys claimed they were promised they “would walk away with the capital amount of €1,000,000 plus €80,000, and that the fund would increase by a minimum of 5 per cent per annum”, according to the judgment.
In 2008 the couple complained to the IFA about their investment, and the charges being levied.
One witness for the bank testified it had “ultimately” emerged the fund was not guaranteed “on account of the management and related fees”.
Mr Justice McCloskey ruled that the terms as set out “had the character of misrepresentations".
Damages have not yet been measured. The case will be back before the court later this month.
The judge noted that the bank’s claim that it was owed €260,000 appeared to be uncontested, and that a “balancing exercise” was required.
Cllr Mc Brearty has declined to comment today.