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Savers in their 80s and 90s are being persuaded to place 20-year bets on the stock market, according to the City watchdog.

Four years after reading the riot act to investment bosses for providing shoddy advice, the Financial Conduct Authority (FCA) said that two-thirds of firms still need to raise their standards.

It revealed some companies in the £600billion wealth management industry were exploiting elderly customers, or not bothering to check if clients can afford to lose money in stocks and shares.

'Absolute madness': Savers in their 80s and 90s are being persuaded to place 20-year bets on the stock market by investment firms, the Financial Conduct Authority (FCA) has revealed (file picture)

In one shocking case, a firm described its elderly clients – including one aged over 90 – as having a 'medium-risk appetite' and a '20-year investment horizon'.

These pensioners were all advised to put most of their money directly into company shares.

In another example, an 84-year-old opening an account was described as having an 'investment horizon' of at least ten years.

But the firm in question made no attempt to challenge this or even inquire after the customer's health.

Last night investment expert Danny Cox of Hargreaves Lansdown described this as 'absolute madness'.

He said it 'breaks every rule in the book' because savers are meant to take fewer risks with their money as they get older.

Watchdog: Four years after reading the riot act to investment bosses for providing shoddy advice, the FCA said that two-thirds of firms still need to raise their standards. Above, the watchdog's Canary Wharf offices

The FCA also found that some firms neglected to update their client records for years and switched customers' investments purely to generate more fees for themselves.

Wealth management firms include private banking arms run by stockbrokers and high street lenders which put together investment portfolios for 1.8million customers in the UK.

They are meant to be tailored to the needs of each customer, and include a mixture of investments including company shares, bonds, commercial property and cash.

In return customers often have to pay thousands in fees.

The FCA reviewed 150 randomly selected customer files of 15 mystery companies.

It concluded that a third of companies 'fell substantially short of our expected standards' and another third need to 'make significant improvements'.

Almost one in four of the 150 files reviewed 'indicated a high risk of unsuitability'.

Liz Field, chief executive at trade body the Wealth Management Association, said: 'WMA works closely with the FCA and will be working with both them and firms on the findings of this report to address any shortcomings.'

It is understood that the high street banks were not involved in the FCA's latest probe.