Approximately 900 AIB customers that put money into two real estate funds were unjustly excluded from a recompense scheme, consumer advocate Padraic Kissane has alleged. From 2002 to 2006, the bank touted Belfry Investments to its clients through the bank itself, its Goodbody stockbroker wing and its division dedicated to serving affluent clients. Mr Kissane stated that the minimum input was set at €80,000 for a single applicant and €100,000 for joint applicants.
The said funds were high-risk ventures that relied heavily on borrowed capital for funding real estate acquisitions, with up to 80% of the funding coming from borrowed money, in addition to investor contributions. While the original fund yielded profit, Belfry 2-6 units were less fortunate and crashed in the aftermath of the 2008 financial catastrophe. This sparked a lengthy legal dispute between a 300-strong investor group and AIB, which included one Supreme Court appeal and concluded with a settlement in 2021.
Investors alleged that they were not adequately informed about the risks involved or that it was a leveraged investment. Clauses associated with the funds necessitated the return of borrowed funds when the value of the fund decreased before the amount lent to it, rendering the investors’ contributions worthless.
According to Mr Kissane, AIB has refused to consider refund and compensation demands from investors in the Belfry 5 and 6 units, alleging that the fund brochures’ modifications clearly indicated to investors that these were high-risk investments. Nonetheless, a representative for AIB noted that a few investors from the two funds received partial or complete refunds after their cases were scrutinised.
Since the end of the previous year, Mr Kissane has been assisting close to 100 Belfry investors and is dissatisfied with the bank’s stance. The financial advisor, who gained recognition after successfully disputing Irish banks’ denial of responsibility for the tracker mortgage scandal, expressed particular concern for those who borrowed money to invest or who utilised their pension funds for investment. He also highlighted the issue of the bank targeting individuals with a low risk appetite for investment.
Mr. Kissane reports several instances, through the majority of investigations he’s conducted, wherein investors were misadvised about the risk factor of their investments. Rather than being deemed “high risk”, these investments were portrayed as safe and secure.
Following a settlement in 2021, AIB embarked on a thorough examination of individual cases to see if investors might be eligible for refunds. Additionally, the bank extended the opportunity for investors to utilise an independent appeals process with a deadline set for the previous November. The bank reveals that almost all appellants, 99.8%, have been informed of their respective results.
AIB has set aside a sum of €239 million for Belfry settlements so far. However, it is believed that payments made so far do not reach that set amount.
Mr. Kissane has urged all Belfry fund clients to contact his office, particularly those who’ve invested in Belfry 5 and 6, including any who haven’t yet received the entirety of their initial investments.