Press Release - 15 May 2007

Financial Services Ombudsman’s views on name and shame issue outlined in his 2006 Annual Report

The Financial Services Ombudsman, Joe Meade, published his 2006 Annual Report today.

Overview of 2006 activity
• 3,800 complaints received (an increase of 14% on 2005); 10,100 telephone enquiries and 64,000 website visitors - some 7,100 complaints have been considered since the Ombudsman was established in April 2005.
• Compensation awards made by him included amounts of €7.4m, €140k, €90k, €40k and €24k in specific cases - details already published in October and January.
• Details of the €7.4m compensation decision, under appeal by Ulster Bank, are outlined.
• A ‘look back’ undertaken at his request, by the Irish Nationwide Building Society, will result in significant amounts being refunded to other customers.
• 60% of complaints were resolved in the Complainants’ favour. Travel and motor insurance, life assurance, bank accounts, mortgages and credit cards were the major complaint issues.
• The Ombudsman expresses concerns about inappropriate investment advice to elderly people.
• Mortgage protection policies may have been taken out unnecessarily on investment properties.
• Concerns about ATM card security as well as a particular mortgage issue were satisfactorily resolved.
• Guidance is given on recurring insurance complaints regarding travel, disclosing material facts, income continuance, permanent health and medical expenses so that both consumers and industry will be more vigilant.

On the question of ‘naming and shaming’ the Ombudsman stated:
• He considers that his current policy of not naming financial providers is an appropriate one but as commentators have raised the issue he considers that a public consultation on the matter would be of value. If the legislature then decides that he should name he will, as a creature of statute, comply. Meanwhile the legislature should note his following opinions when considering whether it is necessary to amend the Ombudsman’s statutory reporting requirements.
• The size of a compensation award or naming providers cannot be the major benchmark for evaluating his role; deciding on complaints in a fair and impartial manner is of greater import in fulfilling his statutory role.
• He has concerns about naming Financial Service Providers alone as Complainants may also have to be named in line with natural justice. This could deter Complainants from coming forward with legitimate complaints. There is no statutory basis for the naming of the parties to a complaint in his published decisions. Investigations must, under legislation, be carried out in private. Any report by him containing names would also need to be covered by absolute privilege.
• He may only name, in his annual report, a provider who does not cooperate with him, or where he considers there is a systemic or very serious issue. He finds it difficult to envisage any situation where a Complainant could be named.
• In reality the whole point of the statutory Financial Services Ombudsman scheme is that consumers be comfortable about making complaints to him about Financial Service Providers and obtaining redress where he deems it appropriate while Financial Service Providers are also confident that he deals with matters in a fair, independent and impartial manner.
• The Courts, on an appeal or judicial review, are the ultimate safeguard to ensure that he performs his role in line with his statutory responsibilities.

Decisions on complaints

Credit Institutions
• Conflict of interest by mortgage broker - €16,500 compensation
• Negligence in management of portfolio by stockbroker - €40,000 compensation
• Credit Union account withdrawal did not respect elderly person’s instructions - €24,000 awarded
• Inappropriate investment in derivatives by 82 year old person - €38,500 compensation
• Bogus non resident account €900,000 tax settlement - complaint not upheld
• Part of an elderly widow’s €1.5 m. investment portfolio was mismanaged by a stock broking firm - €18,500 compensation awarded.

Insurance
• Increase to €140,000 of an ex gratia offer in death benefit case - insurance company commended as intermediary was at fault
• Only the Courts can determine whether an insured person committed or attempted to commit an illegal act - €90,000 awarded
• Medical treatment abroad - prior approval needed - not upheld
• Company and intermediary increase offer for death benefit by €43,000 after negotiations with the Ombudsman
• All reasonable care needed if a claim for a lost purse on a plane is to succeed - not upheld.

Financial Ombudsman Annual Report 2006

Further information
Gemma Normile (6318569) or Diarmuid Byrne (6318561)
Financial Services Ombudsman,
3rd Floor, Lincoln House, Lincoln Place, Dublin 2.
Lo call 1890 88 20 90
Tel: 01-6620899
Fax: 01-6620890
Email address enquiries@financialombudsman.ie

Editors’ note

As an independent statutory office-established on 1 April 2005- the Financial Services Ombudsman ensures that unresolved complaints from customers of financial service providers are investigated, mediated and adjudicated on fairly. He can make compensation awards up to €250,000 which are binding on both parties subject only to appeal to the High Court.