Financial firms to be punished for misleading elderly

THE Financial Regulator’s office has warned it will punish anyone selling investment products they know to be unsuitable for customers.

The regulator’s consumer director Mary O’Dea spoke after an investigation exposed firms offering to sell long-term investment packages to elderly people without providing advice on the conditions attached.

Ms O’Dea said that since a new code of conduct came in last year it has issued 11 enforcement notices to firms, half of which arose because of a failure to gather all relevant information. It has imposed fines of up to €88,000 in these cases.

“Firms are required to act in the best interests of their customers. They cannot begin to sell them any product of any kind unless they have appropriate information about the customer... to sell them a product that is suitable.”

The practice came to light in an investigation carried out by RTÉ’s Prime Time.

It showed how at an initial meeting, an 82-year-old woman was given misleading information regarding her investment options by Permanent TSB.

The company’s chief executive David Guinane spoke on RTÉ’s Morning Ireland programme yesterday and said he was disappointed at how the woman had been treated when she asked to invest a fictional €120,000. She was given an incorrect rate of return.

He said a strict policy regarding investment policies for the elderly had not been adhered to and in future all elderly people will only be sold packages if accompanied by a relative or friend.

“I was very concerned with what I saw, particularly about the inaccurate information that was given by our advisor. But I am confident, because that bore absolutely no relation to the strict sales process we have in place with regards to the elderly with the inherent safeguards that no sale could have happened following that encounter,” he said.

Spokesman for Age Action Ireland, Eamon Timmins, said it was not necessary to require older people to bring a chaperone.

He said in the case highlighted at Permanent TSB, he accepted it was an initial meeting which did not mean the company would have completed the sale.

Mr Timmins said of greater concern was the number of cases investigated by the Financial Services Ombudsman, Joe Meade, where older people had been locked into investment packages which were entirely unsuitable.