The Financial Services Ombudsman has called on financial institutions to carry out a review of all investment products sold to elderly customers since 2006.
Publishing an update of cases dealt with by his office between January and the end of June this year, Joe Meade said the review was needed to ensure inappropriate products were not sold to the elderly. He said the review should be overseen by the new Central Bank.
Mr Meade said it appeared that many people were 'preyed on' by financial institutions and that staff at the institutions had received nice commission from easy targets, many of whom were investing the proceeds of the sale of property during the boom, without knowing the intricacies of the products concerned.
Mr Meade also said that his office was now seeing the effects of the recession, with the number of complaints related to investment products which were not performing well or allegedly mis-sold rocketing by almost 300%. He said the number of complaints about geared property funds had also increased by 200% during the first six months of the year.
In an update on cases for the first half of 2009, the ombudsman reported a 44% increase in complaints received in the period - 3,900 compared with 2,700 in the same period in 2008.
The single biggest award went to two investors in their 70s, who were advised by a bank to take their life savings, which had been on deposit, and invest them in a managed fund.
But the fund experienced a heavy loss in value, prompting the couple to review the investment. They claimed it was only at this stage that they discovered 70% of their investment was based on the performance of the stock market.
After investigating, ombudsman Joe Meade found that the bank had not exercised appropriate care and caution in dealing with the complainants, given their age and investment experience, and failed in its duty of care. He directed that the couple be repaid the full amount for their original investment, €345,000.
There were also a significant number of complaints about insurance products. In one case, €7,500 was awarded to a widower who had been wrongly informed that an insurance policy carried a death benefit of €130,000 in the event his wife died.
The ombudsman also dealt with a number of complaints regarding ATM fraud. In one case he upheld a complaint made by an individual who claimed to have experienced ATM fraud of €540 while travelling in Thailand, which the bank concerned refused to honour.