A number of banks are facing possible sanctions after they were found to be wrongly mis-selling financial products to elderly people.
A so-called 'mystery shopping' exercise involving people who were mainly aged between 72 and 79 years of age, uncovered attempts by four financial institutions to persuade the customers to invest in six-year bonds to older people, rather than put their money in deposit accounts.
The Financial Regulator, which carried out the exercise, stressed that in the majority of cases mystery shoppers were recommended a deposit where the term was no longer than three years. However, it expressed concern that some banks had sought to advise the elderly shoppers to invest their savings in products that could not be accessed for such a long period.
Other issues uncovered during the exercise included a failure on the part of many financial instituions to allocate an accurate risk profile for elderly clients. In addition, some banks were found to have no definition of what constitutes an older customer and did not allow them to have a friend or relation with them when discussing their finances.
Moreover, in certain cases financial institutions did not give customers any advice on the level of emergency funds that should be maintained to provide for medical or other long term care expenses.
"A number of issues of concern were identified during this examination and firms should ensure that their sales processes for older people are robust to ensure only suitable products are sold," the regulator said.
It added that it has taken a number of steps in relation to the issues uncovered and that action may be taken against institutions found to have breached regulations.
The findings come on the back of a list of complaints published by the Financial Ombudsman, which indicated a large degree of mis-selling of financial products to older customers, particularly with regards to the recommendation of long-term investments.
Age Action today called on the Financial Regulator to name the institutionswhich breached regulatory requirements so that older epopel will know which firms take their responsibilities seriously.
"Publication of such breaches may be more effective than fines or sanctions," said Age Action spokesman Eamon Timmins.