Sorry Clubman I should have being more clear in my statement.
Because no letter was sent to New Ireland from EBS releasing its interest in the policy, EBS will still be he noted party on the policy, they will also still hold the sisters policy docs.
If they had released their interest in the policy when the loan was redeemed, they would have returned the policy docs to the sister, this may have made the sister act on the policy and cancel it when the loan was redeemed. I agree with Molly in once sense that the sister should have decided what was to be done with the policy, but EBS have a responsibility to release its interest in the policy and return the policy docs to the customer, after all they have a responsibility to note their interest in the policy at time of cheque issue.
I would be suprised if New Ireland issued any refund on premiums, after all they received no notice to remove EBS interest on the policy, or cancel it and they were on risk in the event of a claim.
Im speaking from experience in that on many a time did I process refunds to customers in EBS for this very reason.
On a legal status, I could not say who, if anyone would or should be responsible for premiums paid on the policy, but EBS did accept it failed on its part and responded by refunding customers.