MORE THAN 900 insurance brokers around the State have been issued with guidelines on the selling of investment products to old and vulnerable clients.
The guidelines issued by the Professional Insurance Brokers’ Association are a response to concerns expressed by the Financial Services Ombudsman Joe Meade about the sale of inappropriate products to elderly and frail consumers.
As the ombudsman yesterday highlighted further “outrageous” examples of misselling to older customers, the brokers’ association said the guidelines were designed to ensure that clients received clear information about the risks involved in investment policies and the costs involved in encashing them.
In a report released yesterday, Mr Meade described the problem of misselling financial products to elderly people as very serious. Asked if the problem was industry-wide, he replied it was “not systemic in the sense that it was happening every day”.
However, he added: “All institutions are affected by this problem. It’s not confined to one bank or insurance company, but even if there was just one case, that’s not good enough.”
Consumers made more than 2,700 complaints about banks, building societies and insurance companies in the first half of the year, up 30 per cent on the same period in the previous year, he revealed.
Mr Meade said some of the increase in complaints could be explained by the downturn in the economy, but the main reason was the clearer complaints procedures set out in a new Consumer Protection Code which came into force last year. Complaints about banks and building societies were up 40 per cent. Those against insurance companies rose 24 per cent.
The ombudsman published four case studies involving the selling of inappropriate investment products to older people, which resulted in decisions in the customers’ favour (see panel). He said he found it “sad and despairing” not only that the cases had happened but that the institutions had tried to defend their actions.
“I make no apology for publishing any case involving the frail and the elderly,” said Mr Meade, adding that he wanted to send a warning to the financial institutions “that you can expect no sympathy from me”.
Mr Meade published the details of some 20 decisions made, of which 15 were upheld. A growing number relate to travel insurance, prompting Mr Meade to advise consumers to shop around.
In one case, an insurance company rejected a claim for the theft of a laptop while the person was on holiday. The ombudsman found a lack of clarity in the policy and awarded the claimant €600. Noting there had been previous complaints about the same type of policy, he ordered the company to review its files. Four other claimants have since received payouts.
In another travel claim, a middle-aged man travelled to Asia on a two-week holiday. While there, his suitcase was stolen from his hotel room and he made a claim for €3,700. The insurance firm rejected the claim, saying the suitcase was stolen by a local woman who was known to the man.
Rejecting the claim, the ombudsman agreed with the company that the man had failed to exercise due care for the safekeeping of his personal items.
