Banks caught trying to scam the elderly
AT least four banks could face hefty fines after they were caught by the Financial Regulator attempting to mis-sell products to the elderly.
A 'mystery shopping' exercise by the regulator uncovered attempts to sell six-year bonds to people in their 70s.
People between the ages of 72 and 79 went into banks and building societies posing as potential customers with money they wanted the bank to look after.
In most cases, the elderly people were advised to put their money on deposit, but in the case of four of the banks or building societies, attempts were made to get them to tie up their money for up to six years.
The institutions trying to lure older people to lock themselves into longer-term investments were not named.
The mystery shopping exercise was just one section of a four-part probe by the regulator that uncovered a litany of other failings by finance firms in their dealings with older people.
Asked if sanctions would be taken against the errant banks, a spokeswoman for the regulator would not rule it out, but said their investigations were at an early stage.
The regulator's Consumer Protection Code requires firms not to sell inappropriate products to anyone. Long-term investments are considered highly inappropriate for older people.
Finance firms found to be in breach of the rules could face fines of up to €5m and could have their directors barred from holding a directorship. Individuals could be fined up to €500,000.
In extreme cases, a finance firm found to have seriously breached the rules could have its licence to operate revoked.
Some 20 banks, investment firms and stockbrokers were examined in the probe. It found that a large number of firms have no definition of an older customer. The regulator suggests anyone over 60 should be regarded as an older customer.
Not all firms allowed older customers to have a relation or friend with them when discussing their finances.
Some 200 firms have now been written to, warning them to treat the elderly properly.
In a statement, the regulator said: "A number of issues of concern were identified during this examination and firms should ensure that their sales processes for older people are robust to ensure only suitable products are sold."
This newspaper reported yesterday that the Consumers' Association of Ireland (CAI) had called for a code of conduct to be put in place to stop financial firms mis-selling to the elderly. Firms that mis-sell to the elderly should also be named by the financial services ombudsman, the CAI said.
The watchdog said a code would clearly set out how banks and investment firms deal with elderly or vulnerable customers.