Ombudsman concern at property advice

The Financial Services Ombudsman Joe Meade expressed concern today at the overseas property investment advice being proffered by some financial advisers.

Over the period July to December 2007, Mr Meade made two awards totalling €55,000 to people who complained about the poor quality of investment advice given on foreign properties.

Mr Meade said he had noted problems in this area in July but noted that confusion and non-declaration of interests were still in evidence.

In case study released today Mr Meade said an investor had sought advice from a company offering investment advice and was advised to purchase it using a deposit of €70,000, or half of the purchase price.

The advisor said it would be possible to sell the property for a profit shortly. However, this did not happen and the investor complained to the Ombudsman that the advice was flawed and the advisor had a conflict of interest as he was also earning a commission as an estate agent from the developer, a fact that was not disclosed to the investor.

When the case was investigated, the Ombudsman found that the advisor was using a business card which on one side showed he was trading as a financial service provider and on the reverse, as an estate agent.

The ombudsman found that the advisor had a "clear conflict of interest" and could not offer independent investment advice on that property.

Although the complainant claimed to have lost €50,000, the Ombudsman found that he was negligent in proceeding with the investment without satisfying himself that the property was correctly valued. As a result, the Ombudsman made a finding of €25,000 against the advisor.

A second payment of €30,000 was made against another property advisor, the details of which were not revealed.

Last year, some 4,374 complaints were made to the Ombudsman, a rise of 15 per cent .

Other complaints to the Ombudsman involved a settlement of €25,000 following a dispute over direct debit payments. Investment advice that was adjudged to be misleading resulted in the award of a settlement of €17,000, the Ombudsman said.