Financial institutions are routinely selling inappropriate financial products to elderly people and should review all of the bank accounts held by older customers, according to the Financial Services Ombudsman, Joe Meade.
Mr Meade yesterday highlighted the case of an 86-year-old farmer who sold his land and was advised by a bank to invest a sum of €850,000 in two insurance bonds with a fixed term of six years. When he died seven months later, the bonds were worth €50,000 less than the original investment.
After a complaint was made to his office, the ombudsman has ordered that the €50,000 be repaid to the farmer's estate, on the grounds that long-term bonds are not suitable investments for elderly people.
But he also found that the bank had "under-invested" part of the farmer's money, having placed €150,000 in a current account and a further €350,000 in the deposit account that paid the lowest interest rate.
Mr Meade said he was disappointed by the volume of complaints he has received in relation to poor financial advice given to elderly people.
"Financial institutions should review as a matter of routine the bank accounts of elderly people so that appropriate amounts are held in them and they are not getting the lowest interest rates or no interest rate. They shouldn't have to wait for the financial regulator or my office to make them do it," he said.
Older people deserve "a higher duty of care", he said.
The ombudsman's call for routine reviews was backed by Age Action. "While the vast majority of older people are financially astute, Age Action is concerned at the number of complaints that older people have had to make to the Financial Services Ombudsman," Age Action spokesman Eamon Timmins said.
Since May 2005, the ombudsman has published eight case studies about unsuitable investments sold to older people. He has recently received three similar complaints.
Mr Meade also gave details of a case where a construction worker was sold a payment protection insurance policy on a car loan. The worker was not covered by the terms of the policy because he was not permanently employed.
He said there could be an industry-wide problem where financial firms sell payment protection policies to contract and temporary workers who are not entitled to claim under the policy.
He ordered that the construction worker be refunded the €2,100 he had paid in premiums.
