Criticism at mis-selling of investments to elderly

FINANCIAL SERVICES Ombudsman Joe Meade has criticised financial institutions for the "systemic" selling of inappropriate investment products to elderly people.

Citing examples such as a six-year investment bond sold to a 94-year-old and another one sold to an 86-year-old who died seven months later, Mr Meade said he was disappointed that the problem of inappropriate selling to older people continued to recur.

And in an implicit rebuke of the Irish Financial Services Regulatory Authority, he said that, when he raised the issue with the regulator three years ago, he was told that no systemic issues of mis-selling to elderly customers had been identified.

Mr Meade said this did not appear to be the case; he had published eight case histories on the issue in recent years and two more to be published in June would show how vulnerable elderly customers were badly treated by some financial institutions.

He called on all financial institutions to review the accounts of elderly people regularly so that appropriate amounts are held in them and low rates of interest are not applied.

Mr Meade said the 4,534 complaints his office received last year represented a 15 per cent increase on 2006. The number of complaints received so far this year is up 17 per cent on the 2007 figure. Six out of every 10 cases are resolved in the complainants' favour. Thirteen of his judgments have been appealed to the High Court since 2005, but only one was overturned on appeal.

After the court found in favour of the Ombudsman in one case involving the Irish Nationwide Building Society (INBS), a seven-figure sum, believed to be about €2 million, was paid to hundreds of other affected customers of the INBS. Mr Meade said this followed a look-back exercise requested by his office.

In another case, in which an insurance company was found to have underpaid on a policy, further investigation found that between 100 and 200 other policies may be affected.

The Ombudsman said he had received more than 20 enquiries from recipients of Army deafness compensation unhappy about the actions of their solicitors in deducting fees before the payment of compensation cheques. However, as the complaints did not relate to the actions of financial institutions, Mr Meade advised them to contact the Law Society.

He has also had to take legal action against up to 100 brokers who had failed to pay the statutory levy of €125 which funds the running costs of the office.

Mr Meade revealed he is investigating a number of complaints of alleged mis-selling and suitability issues involving products sold by the bankrupt International Securities Trading Corporation.

He defended the €3.6 million annual running costs of his office and described the €14,000 annual stipend paid to members of the Ombudsman Council as a pittance.