The Department of Enterprise, Trade and Employment is to investigate the relationship between National Irish Bank and the Isle of Man company Clerical Medical International.

The Minister of State, Mr Noel Treacy, is to write to the bank "to seek information as to the status of their relationship with Clerical Medical International (CMI) in the context of insurance regulatory requirements", according to a statement issued by the department yesterday.

In June 1995 the Clerical Medical & General Life Assurance Society notified the department of its intention to carry on business on a cross-border basis from the UK. Mr Treacy is seeking to establish whether CMI is associated with or is a subsidiary of this company. CMI in the Isle of Man has indicated that it is a subsidiary of the UK company and was thus authorised to sell products here. The CMI group was bought last year by the Halifax Group. The notification by CMI in the UK was in accordance with the European Communities (Life Assurance) Framework Regulations, 1994.

NIB were the main distributor of the CMI bonds in Ireland in 1994, according to Mr David Shelton, marketing manager with the Clerical Medical group. The product is still being sold by the bank, but the level of sales of the bond is now much lower here than it was in 1994.

"Sales in individual markets depend to an extent on local circumstances, such as local regulations, or changes in economic conditions." The high sales of the product in 1994 "could be for a whole range of reasons".

The Consumers Association of Ireland (CAI) said a number of Isle of Man-based life assurance companies may have been selling life policies through Irish intermediaries to Irish consumers for several years.

"There is sufficient reasonable doubt that these policies comply with Irish law in relation to the issuing of contracts of life assurance to Irish consumers, and consumer rights under these policies may be affected."

The number of consumers involved is unquantifiable, as the companies do not submit data to the Department of Enterprise, Trade and Employment. "Commission payable by these Irish offshore life offices in general exceeds that payable by Irish life offices" the association said.

"CAI wish to alert consumers to the questionable legal status of these policies."

The Democratic Left spokesman on finance, Mr Pat Rabbitte, called on the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, to appoint an official under the Companies Act to investigate the sale of the bonds by NIB.

He also said the affair, "coming so soon after the disclosures about the Ansbacher accounts, raise very serious questions about the performance of the Central Bank". The public will want to know "how it is that the Central Bank was unaware of or indifferent to, not just the Ansbacher accounts, but also apparently the NIB/CMI operation".

Mr Rabbitte called on the main banks to state whether or not they offered offshore investment schemes similar to the NIB scheme now being examined by the Revenue Commissioners. He also called on the Fianna Fail deputy, Ms Beverly Cooper-Flynn, to make a statement to the Dail when it resumes tomorrow. Ms Cooper-Flynn, who worked for NIB prior to her election, should outline any role she played in relation to the scheme and what she knew of the motivation for it, he said. Ms Cooper-Flynn was not available for comment yesterday.