Financial services complaints rose by 30% last year

COMPLAINTS against financial institutions increased by almost 30% last year, according to the latest report from the Financial Services Ombudsman.

Of the 7,619 complaints received, 4,668 were made against the insurance sector and 2,951 against credit institutions.

Over 17,000 telephone calls were received while more than 200,000 visits were made to the website — financialombudsman.ie. The cases include:

*A COUPLE was awarded €250,000 after a bank was found guilty of a “cavalier approach” following the collapse of their investment.

The husband and wife in their mid-60s retired from farming and sold land for €3 million. They were approached by their bank and invited to invest in bonds.

In April 2007, they invested €2m in two bonds which they understood were capital guaranteed. By December 2007, their investment had fallen to €1.88m. The bank assured them everything was fine.

By May 2008, the investment had fallen to €1.75m. The bank said things would improve. By August 2008, the value of their investment had fallen to €1.6m. The bank said “don’t worry”, it was a “guaranteed fund”.

Six weeks later, the bank admitted it had given them wrong information.

The couple cashed in the bonds for €1.46m with an overall loss of €540,000.

The ombudsman awarded the maximum compensation award of €250,000.

He also directed that the bank should make a formal written apology for belittling remarks made by one senior official.

*A BANK was ordered to return €345,000 to a couple in their 70s after rushing through an investment with unacceptable haste and failing in its duty of care.

It was clear the couple had misunderstood the issue of risk and nature of the investment, the ombudsman said.

In late 2005, the couple switched their life savings from a deposit account to a managed fund after being approached by the bank and advised that they would get a much better return.

Three years later, the bank told them to switch the investment to cash as the fund was losing heavily in value.

The couple said they only learned in 2008 that 70% of the five-year investment, then worth €265,000, was based on the stock market.

The ombudsman found the bank had not exercised appropriate care and caution dealing with the couple, given their age, investment inexperience, previous investment profile and the health of the husband.

*A FINANCIAL provider was ordered to buy back a bond from an elderly couple for the original investment of €300,000, plus €5,000 compensation, for what the ombudsman described as the “mis-sale” of the product.

The husband and wife, aged 85 and 84, were living with their son and his wife.

The money invested in December 2006 was from the proceeds of the sale of their house. The husband died within 18 months.

The ombudsman found that recommending an investment product with a six-year term as well as hefty penalties for early encashment was a dereliction in the provider’s duty of care.

*A COMPLAINT about an alleged €1m investment by an elderly man who blamed failing eyesight for putting trust in a financial company was not upheld.

The ombudsman pointed to the man’s own evidence in 2006 and 2007 where he had said he had signed everything put in front of him, not because of his eyesight but because he had complete trust in the company.

*A COMPLAINT about an insurance company that refused to pay €3,500 for the loss of a vehicle was not upheld because the owner did not declare in a motor theft report that he knew it had been stolen by his son. Gardaí later recovered the burnt out vehicle.

The ombudsman noted the man admitted he knew it was his son who had taken the vehicle when he was interviewed by the company.

*A COMPLAINT against a health insurance company for refusing to pay for a hair transplant to a man’s eyebrow area following the removal of a malignant lesion was not upheld.

The man, who worked for the company, maintained the hair transplant should be covered in the same way as breast reconstruction following cancer was covered.

The ombudsman found that the limitations of his plan were clearly defined.


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