Blog – McCarthy & Associates – Galway Talks, 24/07/2014

galway-bayfmQuestion:  My 80 year old mother went to her bank to move monies to another institution. When she was there they tried to sell her a 5 year investment.  Surely this is not allowed?

Answer:  I find it shocking that a bank was trying to sell somebody of your age a long term investment product.  Their actions contravene the Code of Conduct laid down by the Central Bank. 

As many bank customers will have noticed, the sales pressure they are under from bank staff is quite immense.  This is due to the fact that banks are looking at alternative products other than loans, to generate income.  Irrespective of the problems they are having this type of behavior is disgraceful.

Issue:  Government introduces new legislation to protect home owners, where their mortgage has been sold to an overseas fund.

Comment:  Over the last year a number of mortgage books have been sold to overseas buyers, who will then continue to deal with the borrowers of these loans.  The problem that has arisen is that these institutions are not subject to the same Code of Conduct on mortgage arrears as other lenders.

To redress this problem and ensure that all customers have the same protection, the Government is introducing a new bill, which should be law by the end of the year, whereby any institution operating here who own a mortgage book will be subject to this code. 

This is a welcome development and should provide mortgage holders with these institutions greater protection.

Question:  Why is it that some Personal Pension Plans seem to perform better than others in recent years? 

Answer:  It has been my experience that people have a tendency not to review their pension plans on a regular basis i.e. every 5 years.  This is due to a number of factors, whether it is a lack of understanding that this should happen or that they have been dealing with advisors who do not do so. 

Pensions, like investment products, need to change in line with developments in the financial world and as a result some people, who were properly advised to move into more modern type funds, have faired far better in recent years.

The key to having a personal pension is to have the investment strategy reviewed every 5 years.