Meade warns of mis-selling to elderly

The Financial Services Ombudsman has found that a bank sold an unsuitable financial product to an elderly bachelor and that payment protection policies are being mis-sold to construction workers.

On his website today, Joe Meade highlighted the case of an 86-year-old man who bought two insurance bonds to the value of €850,000 on the advice of his bank, one of which was due to mature after four years, the other after six.

However, when the man died seven months later the value of the of the bonds at that stage was €50,000 less than the original investment. The executors of the man's estate wanted to administer it rather than waiting for six years.

Mr Meade decided that the bank should return the shortfall on the original investment to his estate on the basis that "more should have been done by the bank to ensure beyond doubt the policyholder's satisfaction with what was being advised by it".

Mr Meade added that he was "rather surprised" at the advice given to the 86-year-old customer to leave the balance of his savings, some €350,000 in a demand deposit account and €150,000 in a current account.

The Ombudsman said this was the eighth case involving unsuitable products being sold to elderly people since 2005 and said he was "disappointed" that the problem was recurring and that he has referred the matter to the Financial Regulator.

A second issue raised by the Ombudsman is the mis-selling of payment protection products to construction industry workers.

Mr Meade based his comments around a case involving a worker who took out the policy in June 2004. In December 2005 the man's employment was ended.

However, the insurance company said because the employment was of a contract, rather than permanent nature, it declined to pay out under the policy.

On reviewing the case Mr Meade said the product had been mis-sold as the insurance company "should have been, and indeed was, aware of the nature of the complainant's occupation".

He ordered that premiums of €2,100 be repaid to the complainant as the insurance had never been of any benefit to him.