Updated 5.20pm

A financial services company has been ordered to pay well over €100,000 in compensation after it mis-sold complex investment products to under-qualified investors.

Global Capital Financial Management Ltd had failed to meet the legitimate expectations of investors who it enticed by its sales talk and the prospect of a “secure” investment, an appeals court has ruled. 

The court’s judgements concerned appeals filed against nine decisions delivered by the Financial Services Arbiter, which had found that Global Capital had not provided appropriate and suitable advice to its clients and ordered it to compensate them. 

Cases date back to the period between 2004 and 2009. The company has since changed hands and is now under different ownership and management, it noted in a statement later on Friday. 

All nine cases revolved around complex investments, including asset-backed traded life policy investments such as Keydata Lifemark SA (Secure Income Bond) and Protected Asset Traded Endowment Plans.

Complainants had all invested money they earned through blue-collar jobs. Four of the cases concerned pensioned couples and another two involved elderly siblings.

Other investors included a part-time waiter who was 17 years old at the time of investing; a night watchman and maintenance worker attracted by the company's adverts; and a man who had just sold his car-spraying business and was looking to invest proceeds. 

One of the couples explained how a GlobalCapital sales representative had turned up at their home in 2007 and urged them to invest a sum the husband had received through the Port Workers Scheme, telling them the “capital was guaranteed”.

Two years later, they filed a complaint with the financial regulator after they were told by the company that the investment was not doing well. 

Documents revealed when that complaint was upheld showed that a Know Your Client form had been filled in by a company official who was not in the room when the clients had met to invest their money. 

Investors had signed an Experienced Investor Declaration but there was no evidence that they understood what that meant. They told the court that company representatives had assured them that “their investment would only fail if America went bankrupt”.

The court of appeal rejected GlobalCapital’s argument that the actions were time-barred in eight of the nine cases. 

It also refuted the company’s plea that the investments had gone sour because of the 2008 financial crisis, saying ‘force majeure’ pleas did not apply when there was evidence of misselling. 

Financial service providers had to properly assess the suitability of investment products for investors and could not just rely on brochures intended to maximise sales, the court said. 

The court also noted that GlobalCapital had not summoned any of its employees directly involved in the cases and instead relied on the testimony of its current compliance officer, who was not even working for the company at the time. 

A general disclaimer warning investors that investments' value "can go down as well as up" and that "past performance is not a guide to the future" was generic and did not provide specific information about the level of risk the particular investments in question carried, the court said. 

“There is no evidence of the particular risks involved in Lifemark SA-Secure Income Bond Issue 3. The term ‘Secure Income Bond’ in itself reassured consumers of a sound investment,” Judge Anthony Ellul observed.

The Court concluded that Global Capital had to compensate investors in all eight cases which were not time-barred, as well as pay interest to cover loss of earnings in the ensuing years, in some cases as far back as 2008. 

It also condemned Global Capital to shoulder full costs in six of the cases and 9/10ths of costs in the other two cases.

Amounts of compensation vary from one case to the other and will have to be recalculated by the financial arbiter in two of the cases. 

Lawyer Stefano Filletti represented clients in five of the cases. 

In a statement issued on Friday, Global Capital's current ownership said that the ruling would not impact its bottom line as it had set aside funds for compensation.

Company chairman Paolo Catalfamo said that since taking over in 2016, he and his team had completely restructured the company's management and corporate governance structures and was no longer in the business of selling structured financial products.