ISLE of Man Bank has been ordered to review all sales of investment products to customers aged 70 and over – after it hit the headlines over an allegation of mis-selling.
The bank had earlier defended its treatment of elderly Norman Hensher, who died within weeks of taking out an annuity, but now, following a review of the case by the island’s finance watchdog, it has agreed to pay back all the money to his estate.
Eighty-year-old Mr Hensher, who lived in the island, put most of his life savings into a pension from which he would never see a pay-out. He had been diagnosed with throat cancer in August 2007 and died in March the following year without seeing a penny from the annuity into which he had invested nearly £500,000 of his life savings.
Insurance giant Aviva got to keep £485,000 of his annuity investment – while the salesman from Isle of Man Bank earned a £15,000 enhanced commission.
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Mr Hensher’s family became locked in a bitter row with Aviva and parent bank RBS International over the incident.
The bank strenuously denied accusations of mis-selling.
After Isle of Man Newspapers reported the story in December, the Isle of Man Financial Supervision Commission (FSC) intervened to review the case.
The FSC concluded that it was not completely comfortable that all internal processes had been followed – and now the bank has decided to ‘unwind’ the sale and repay the money to Mr Hensher’s estate. The FSC is also making separate inquiries about the individuals involved in the sale of the investment.
In a statement, the bank said: ‘Following further review of the files of Mr Hensher, with the FSC, Isle of Man Bank has decided to unwind the sale of the annuity to the late Mr Hensher and all monies are now being passed to Mr Hensher’s estate from the bank and the annuity provider Aviva.
‘We believe Mr Hensher’s case was a unique set of circumstances. At all times the bank acted in accordance with Mr Hensher’s wishes.
‘Nevertheless, Isle of Man Bank will be reviewing all sales of investment-related products to customers aged 70 years and above since 2008, to confirm we have complied with the very high standards under which we operate.’
Bachelor Mr Hensher lived in a hotel in the island. He first met a bank salesman in February 2007 to get advice about investing money from the sale of his family’s furniture-making business.
In August that year, he underwent radiotherapy after being diagnosed with throat cancer. By January 2008 doctors were concerned that the cancer had spread. He had problems eating and now weighed less than nine stone. That month the bank adviser paid him another visit.
He chose to invest £500,000 into an immediate life annuity of a kind usually bought by people when they retire and typically paying a fixed income for life.
The bank says it warned him that no- one would inherit his annuity, and it says he rejected advice to take out capital protection, insisting he had no dependants or next of kin.
But the FSC said that if the bank had made further inquiries about his illness, it is unlikely the annuity would have been considered suitable.
In a statement, the FSC said: ‘This case has highlighted the need for all financial advisors to ensure ill health and life-expectancy issues disclosed by a client are properly understood, taken into consideration and fully documented in the licenceholder’s records.’