Investors paid €1.4m over bad advice

Investors paid €1.4m over bad advice

More than €1.4m has been paid out this year to angry investors who claimed they were badly advised by finance houses, it was revealed today.

In one case an unnamed bank was ordered to write a formal letter of apology to a retired farmer and his wife after a senior manager told them they should not complain about losing €540,000 in an investment.

Financial Services Ombudsman Joe Meade, who leaves the office at the end of the month, warned: “They know my track record of dealing with complaints.”

The couple in their 60s had sold their land for €3m before investing €2m of it in a scheme they wrongly thought was guaranteed.

The banker told them: “Having done so well out of the sale of your land, you ought not to be complaining about the losses incurred when the proceeds were invested.”

Mr Meade branded the banker’s remarks belittling.

“If that was the attitude of the banks in general to their customers, is it any wonder we are in the mess we are in?” he said.

“How can you countenance that?”

The Ombudsman cannot name and shame finance houses but the Attorney General is examining whether a public interest clause can be introduced allowing the office to identify banks.

“Financial institutions must understand that customers give them their money in trust. They should accordingly give it proper duty of care,” Mr Meade said.

“If they make mistakes they should own up rather than putting forward spurious arguments.”

The Ombudsman received 7,150 complaints in the first 11 months of the year – an increase of 34% on the same period last year.

Since it began work more than five years ago it has ordered payouts totalling €60m and dealt with almost 25,000 complaints.

Mr Meade said a huge number of cases in the last year involved investment schemes and mortgage breakages.

Here are some of the key rulings:

:: A 73-year-old woman and her 80-year-old husband were awarded €175,000 after they took €1.5m euro from a deposit account and invested it on the advice of a banker.

It lost €290,000 euro in a year after the bank wrongly told them the €1.5m was guaranteed.

:: Two investors were awarded €125,000 each after a stockbroking firm gave them disastrous advice and investments worth €330,000 were completely wiped out.

The firm was reported to the Financial Regulator after it advised the investors to pump money into trades the brokers were promoting themselves – a conflict of interest.

:: A bank was ordered to pay a customer €100,000 after officials lost a Land Certificate for a parcel of land he had agreed to sell for €225,000.

Subsequent delays in getting a duplicate cert scuppered the deal and the Ombudsman ruled the bank had been negligent and unprofessional.

:: A grandmother was awarded €1,000 after an insurance firm cancelled her motor policy without telling her.

She was left to drive for 12 months not knowing she had no cover.

The company said it had not been paid an additional sum for a named driver when the policy was being renewed.

It cancelled the policy, deducted the amount owed for the temporary driver and refunded the remainder back onto her credit card without informing her.

:: A 68-year-old woman, a long-standing customer of a bank, was refunded €410,000 after investing money from the sale of her house.

The bank had advised the woman, who was separated, lived alone, had no pension and was working part time.

The deal turned sour but the woman was told not to worry even though it had lost 12.5% of its value.

She was told it would recover and told she had to give six months' notice before pulling out of the investment.

The bank made mistakes on her employment status, level of income, asset value and marital status were recorded.

The Ombudsman found the Bank failed in its duty of care.

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