Loathe as I am to focus once again so soon on elderly people, as a vulnerable class, it seems justified by the latest data received by the Sunday Times from the Financial Ombudsman Service (FOS) which indicates growing evidence of inappropriate investment products being sold by banks to the over-65s.
The Sunday Times reports ‘ that previously unpublished data from the FOS shows that complaints from people over the age of 65 concerned with investment products sold by banks rose by 19% last year, from 1,495 to 1,777. Unit- linked bonds were the most common cause for complaint.’
At the root problem is the practice of paying levels of sales commission which delivers to front office sales staff higher commission than for other services. According to The Sunday Times there is a move from a cross-party commission to have such sales commissions banned. The Future of Banking Commission has today published a report setting out a number of banking reforms.
Whilst the report says that a commission based system may not be responsible for all the complaints receieved, it is considered largely responsible, financial advice being skewed towards the higher commission earning products. Many over-65s are being recommended inappropriate investments for their age and needs. For example, a person aged 78 years should not be persuaded to put cash into long term bonds linked to equities on the stock market. For him, or her, short term capital losses may not be recovered if the investment needs ‘to be cashed-in’ for unexpected outgoings. The message seems to be clear. Do not be so persuaded if you need,or may need, your money to hand for other purposes than investment, such as your own care, or maintenance. If in doubt,and in these times of low return on bank deposit money,you might consider an independent financial advisor who is not paid any commission, and who is prepared to advise you on the best place for you to put your money given your particular circumstances.
If you have been subject to what you feel is mis-selling of financial products, the Sunday Times would be pleased to hear from you at