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References to the Financial Services and Markets Tribunal consisting of Stephen Oliver QC, Andrew Bartlett QC, Terence Carter FCA and Keith Palmer
Decision published: 26th July, 2002
FACTS
To understand why the regulatory enforcement action which triggered this reference by Eurolife Assurance Company Ltd (EAC) to the Financial Services and Markets Tribunal was originally taken it is necessary to examine some of the history of the Eurolife Group. The group holding company was Eurolife Assurance Group plc (EAG) and its subsidiaries included Eurolife Capital Funding plc (ECF) and Eurolife Fund Management (EFM) as well as EAC itself. EAC's main business was the sale of single premium bond products distributed by IFAs. In 1996 EAG had issued some L3.2m worth of publicly quoted bonds repayable in December, 2002 and listed on the Irish Stock Exchange. These were marketed to the public within PEPs. In 1999 some L15.2m worth of `secured bond ISAs' secured on Eurolife group debt were issued as publicly quoted bonds listed on the Irish Stock Exchange, packaged and marketed within ISAs managed by EFM. The proceeds of this exercise were lent to EAG which is due to repay the loan on maturity of the bonds in 2005 to ECF. FSA commenced an investigation of EFM under s. 105 Financial Services Act 1986 on 13th August, 2001 concerning the use to which the proceeds of the 2005 debt issue had been put. FSA's concerns stemmed from the fact that representations had been made to Personal Investment Authority (PIA) (EFM's then regulator) in 1999 by four of the company's directors about use of the proceeds of the ISAs containing the 2005 debt. Some of the proceeds had been used to meet various shortfalls in funds of a Gibraltar-based Eurolife group company. Those four directors resigned from EFM in November, 2001, undertaking to carry out no controlled functions at or for the company but the concerns of those directors too formed part of this Tribunal reference.
In June, 2000 HM Treasury began an investigation into EAC in 2000 under s. 43A of the Insurance Companies Act 1982 and at the same time the company ceased writing new insurance business. On 24th August, 2001 FSA served a notice on EAC under s. 12A Insurance...