ELDERLY PEOPLE are being sold inappropriate investment packages by some financial institutions who see them as “easy targets”, the Financial Services Ombudsman has said.

Publishing a selection of 27 case studies compiled from cases that have arisen so far this year, the ombudsman, Joe Meade, said he believed staff members in financial institutions were paid commission to secure inappropriate deals.

Many of those targeted were people in their late-70s to mid-80s who had received money after selling land or houses. In most cases, the money in question constituted their life savings.

Mr Meade said his findings highlighted the need for all financial institutions to undertake a “root-and-branch review of all investments made to the elderly since 2006”.

He added that the new Central Bank Commission should insist on banks carrying out this review and should assess these results.

Mr Meade also said he intends to write to the Minister for Finance to request that the ombudsman should be given legislative authority to name particular institutions, when it is in the public interest.

The ombudsman is not permitted to name the specific institutions it investigates.

In particular, yesterday’s summaries show how three elderly couples were refunded just over €750,000 in total by the ombudsman.

In one case, a couple in their 70s had deposited their life savings – €345,000 – in a bank. In 2005 they were approached by the bank and advised that they would get a better return if they invested that money in a managed fund.

In 2008 they were again approached by the bank who informed them that the fund was dropping in value.

The complainants alleged that it was only at this point that they were fully informed about how the investment functioned, in particular that 70 per cent of the investment was based on the performance of the stock market.

In addition, they were unable to withdraw their funds for at least six months at which point a penalty of €9,000 would also arise.

The ombudsman found that the bank had not exercised appropriate care and caution in dealing with the complainants, given their age, investment inexperience, and state of health.

He directed that €345,000 should be refunded to the complainants who would return the investments to the bank.

Overall, Mr Meade said there has been a 44 per cent increase in the number of complaints received by his office so far this year compared to the same period last year.

Approximately 4,200 complaints have been received for the first six months of this year, in comparison to 6,000 for the entire year in 2008.

The vast majority of complaints this year so far relate to investment funds.

Although Mr Meade said the increase in complaints by investors may be attributed to the dramatic fall in investment fund values in the past year, he pointed out that he did not automatically uphold all complaints. In 37 per cent of cases he ruled against the complainant.

One of the case studies cited yesterday outlined how a man in his 80s had complained that he had made two lump sum investments totalling €1 million on the recommendation of an investment bank, but only had found out later that these investments did not provide the capital guarantee he claimed he had always wanted.

The Ombudsman ruled against the complainant, finding that the complainant could not but have been aware that the capital being invested was in no way guaranteed, and that it could fall in value as well as rise.