EMBATTLED AIB is facing another crisis this weekend after claims by elderly customers that a large portion of their life savings was wiped out after the bank advised them in 2000 and 2001 to switch their money into risky investment products.

Some of the pensioners face losses of up to ?80,000 after the value of their investments plunged in the stock market collapse of 2001 and 2002.

The customers, many of whom suffer from ill health, accused AIB of failing to tell them about the risks involved in switching their savings out of secure cash deposits. Many said they believed their money would still be secure.

The latest damaging revelation comes as AIB battles to contain the damage caused by reports it systematically overcharged foreign exchange customers over a period of eight years. This is being investigated by the government's new financial watchdog, the Irish Financial Services Regulatory Authority (IFSRA).

On the grounds of confidentiality, a spokeswoman for the IFSRA refused to confirm whether it was also investigating the allegations of misselling by AIB to customers, even though the issue has been brought to the watchdog's attention by the Consumers' Association of Ireland (CAI).

Labour's finance spokeswoman, Joan Burton, said bank customers were still exposed to sharp practice, even though the IFSRA had been given a strong mandate to protect consumers. "There is a whole series of practices which leave consumers in a very risky position, " she said.

"It's sharp practice when the uninitiated are sold financial products that are more risky than they appear." The finance spokesman for the CAI, Eddie Hobbs, said elderly people were especially at risk from misselling.

"Banks are now more akin to car salesmen and these people were like sheep to the slaughter, " he said. He added that management had "a lot of questions to answer for allowing elderly people's money to be moved out of deposit in this way." AIB said it was never its policy to systematically move pensioners' savings into investment products, even though it claims that many people would benefit in the long run by making the switch. A spokesman denied it failed its customers.

"There was a customer demand for something which might do better than deposits, where interest rates were historically low, " he said. "Any potential higher return must, by definition, come with an element of risk." Meanwhile, the Sunday Tribune reports on page 2 today that AIB was still imposing a 1% charge on customers making certain foreign exchange transactions until the middle of April this year, weeks after it recognised this was twice what it was legally allowed to charge.