A sharp rise in complaints to the Financial Services Ombudsman has been linked to the “alleged mis-selling of investment products” by banks and other financial service operators.
Ombudsman Joe Meade received some 3,900 complaints in the first six months of 2009, a 44 per cent increase on the 2,700 recorded for same period last year.
A spokesman said the office had witnessed a rise in grievances relating to the sale of various investment products.
In the majority of cases, he said, people were claiming they had not been fully advised of the risks related to the investments.
He said the rise in overall complaints may also be linked to an increased understanding by the public of the Ombudsman’s role.
The Ombudsman today published on its website summaries of 27 findings made in disputes between individual investors and financial service operators since January.
One of the cases resolved by the Ombudsman related to a couple in their 70s who had their life savings of €345,000 on deposit but were approached by their bank in 2005 and advised they would get a better return if they put their money in managed fund.
In 2008, the couple were then contacted by the bank and advised to immediately switch the investment back into cash as the fund was “losing heavily in value”.
The complainants claimed that it was only then that it was explained to them how the investment worked and in particular that 70 per cent of the investment was based on the performance of the stock market.
The couple claimed that they had never been told this before and that they would not have entered into an investment that was based on the stock market performance.
The Ombudsman ruled that the bank had “not exercised appropriate care and caution in dealing with the complainants, given their age, investment inexperience”.
The Ombudsman directed that the full amount of money paid for the investments, €345,000, be returned to the couple.
In another case, an elderly man in his 80s complained he had only discovered late on that investments totalling €1 million, which he had made with an investment bank in 2006 and 2007, did not provide a capital guarantee.
The investments had since fallen considerably in value, and the complainant wanted to be reimbursed the €1m but the bank maintained that the investment options selected by the man had been fully explained and clarified with him.
The Ombudsman ruled that it was highly unlikely the man was unaware of the situation with regard to his investments “as he was an experienced investor”. The complaint against the bank was not upheld.
Of the 5,947 complaints dealt with by the office last year, 62 per cent were resolved, and 38 per cent were rejected.
The Ombudsman has returned more than €45 million to consumers and resolved 87 per cent of complaints since it was established in 2005.
