Ulster Bank has settled a mis-sold loan insurance claim brought by Dublin property developer David Agar, after Mr Agar successfully claimed that he had been sold a complex derivative insurance product without being told of the risks involved.
In an action similar to the claims for compensation for mis-sold interest rate swaps in the UK, Mr Agar claimed that Ulster Bank had recommended in 2007 that he purchase a number of financial products related to interest rates on loans he had with the bank.
He stated in his claim for mis-sold loan insurance that he was not told that the complex derivative insurance product obliged the bank to pay him a dividend when interest rates increased or that he was liable to pay the bank a dividend when they fell.
Furthermore, it was claimed in the High Court that the value of the loan insurance allegedly mis-sold to Mr Agar covered finance of 87 million Euros, whereas the funds borrowed from Ulster Bank only amounted to 47 million Euros.
At the time the insurance was sold to Mr Agar, the ECB lending rate was 4 percent. It subsequently fell to 0.75 percent and the bank sought extra payments under the terms of the allegedly mis-sold loan insurance product.
Ulster Bank – whose parent company Royal Bank of Scotland was one of the first banks in the UK to be identified as mis-selling loan insurance to businesses – denied that they recommended any complex derivative insurance products to Mr Agar or made any misrepresentations to him.
However, in the first settlement of its kind in Ireland, Ulster Bank agreed to write-off 30 million Euros of loans and pay Mr Agar´s legal fees of 1 million Euros without admitting liability for his mis-sold loan insurance claim.