Aegon Scottish Equitable International (ASEI) has been accused by an adviser of publishing misleading literature for a cash deposit fund offered by Kaupthing Singer & Friedlander IOM (KSFIOM).
This led to a failure to transfer £90,000 of his client's assets out of the fund before the bank went into administration.
The client asked for his cash, held through an ASEI bond, to be moved out of the account five days before KSFIOM closed its doors after becoming nervous about the bank's stability.
He followed ASEI's procedures for making a transfer and was assured by telephone for five successive days that the transfer would be made, but the funds were not returned. ASEI eventually confessed that KSF had invoked its rights not to permit withdrawals but the adviser said he had not been informed through the bond's literature, supplied by ASEI, that the bank could act in this way.
"This was news to me, my client and his former IFA who had established the bond originally," the adviser says.
His client adds: "ASEI is supposed to be a reputable company. It gets paid fees for running these offshore bonds and it is reasonable for its customers to assume it knows how to read and summarise simple terms and conditions accurately. It is disingenuous for it to suggest that its summary of the terms is anything other than wholly misleading."
The adviser currently dealing with the case has been canvassing opinion from other IFAs on the issue.
"'There is huge anger, worry and frustration at the way in which ASEI has cast them adrift. I have uncovered a couple more depositors via ASEI who were in the process of withdrawal prior to ASEI's collapse that have yet to receive funds.
"The former rate sheets were woefully inadequate in their disclaimers and data, some of which was wrong. Information on compensation was lacking and generally the approach from ASEI in providing info was slap dash."
The client and his current adviser have made a formal complaint to the Irish Ombudsman, because ASEI is a Dublin-registered company, and are awaiting judgement.
A spokesman for ASEI says: As this customer has a complaint at adjudication stage with the Irish Ombudsman, we cannot comment on his specific case. However, like many other product providers with customers affected by the extraordinary circumstances surrounding the failure of Kaupthing Singer and Friedlander (Isle of Man), AEGON Scottish Equitable International is working hard to ensure the best interest of all our customers.
"We have legal representation at proceedings in the Isle of Man and we will continue to push for a fair resolution which will end the uncertainty of our customers who have deposits in the bank."
According to ASEI, 326 of its bond customers had deposits with Kaupthing Singer and Friedlander (Isle of Man) with total deposits around £54.5m.
Depositors in KSF will face further delays in the lengthy process of getting their money returned after wrangling over the terms of the deal means a key decision on compensation has now been adjourned until April 9.
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