While the statutory Financial Services Ombudsman's Bureau came into operation on 1 April 2005 I took up the position of Financial Services Ombudsman on 16 May 2005. So far I have met the Irish Mortgage Council and the chief executive of the Irish Bankers Federation. I have also addressed the annual lunch of the Irish Insurance Federation, met the Financial Regulator and the Pensions Ombudsman , have had various other informal meetings and also media interviews. You will therefore appreciate that I am, at this early stage of my role, pleased to address this important gathering as I want to get to know you, to work in a spirit of cooperation and to hear about any concerns you may have be they real or unfounded. Many of you I met or had contact with in my former role as Data Protection Commissioner.
In this address I aim to outline
the roles of the Financial Services Ombudsman, the Financial Services Ombudsman's Bureau and the Financial Services Ombudsman Council,
how complaints will be dealt with and how matters will be developed in the future,
the cooperation with the Pensions Ombudsman, the Financial Regulator and indeed EU wide.
What is an Ombudsman?
An Ombudsman is an independent and impartial means of resolving certain disputes outside the courts. It covers various public and private bodies and looks into matters after a complaint has been made to the relevant body and the complainant is not happy with the outcome.
Why a statutory Ombudsman for the Financial Services Sector?
There have been voluntary ombudsman schemes in Ireland both for the credit institutions and the insurance sector since the early 1990s. This was recognition by the sectors that a complaints resolution process outside of the Courts was necessary and appropriate. While the voluntary schemes worked well it was felt in the late 1990s as part of the overall enhanced regulatory framework for the financial services sector including the establishment of the Financial Regulator that a statutory Ombudsman scheme with enhanced powers was necessary for all providers of financial services-the McDowell report. This is now the position and is enshrined in legislation-the Central Bank and Financial Services Authority of Ireland Act 2004-section 16 and schedules 6 and 7.
What are the Financial Services Ombudsman and the Financial Services Ombudsman's Bureau?
The Financial Services Ombudsman's Bureau is the corporate entity of the new statutory scheme and consists of the Financial Services Ombudsman, each Deputy Ombudsman and the staff. It is a statutory body funded by levies from the financial services providers. The Bureau-which I lead- deals independently with complaints from consumers about their individual dealings with the financial services providers that have not been resolved by the providers. It is a free service to the complainant and legal representation is not necessary but if it is the complainant bears its own costs. Broader issues of consumer protection are the responsibility of the Financial Regulator.
Is the Bureau different from the voluntary schemes?
The Bureau's remit has been expanded from the existing voluntary schemes which have been incorporated into its work. In addition to those it also deals with complaints regarding interalia members of Credit Unions, pawnbrokers, stockbrokers, moneylenders, hire purchase matters, customers of insurance and mortgage brokers; all other regulated financial service providers, and indeed nonregulated financial service providers.
Financial Services Ombudsman Council- what is its role?
I feel it is now appropriate to say a few words about the functions of the Financial Services Ombudsman Council. The Council comprises ten people appointed by the Minister for Finance and drawn from the various industry and consumer interests with an independent Chairperson.
Its function as laid down in the Act is to:
appoint the Ombudsman and the Deputy Ombudsman
prescribe guidelines under which the Ombudsman is to operate
determine the levies and charges payable for the performance of services provided by the Ombudsman
keep under review the efficiency and effectiveness of the Bureau and to advise the Minister on any matter relevant to the operation of the Bureau
Advise the Ombudsman on any matter on which the Ombudsman seeks advice.
Let me reemphasise that the Financial Services Ombudsman Council has no role whatsoever regarding complaints resolutions- that is my independent function but I want to compliment them for the work they did and are continuing to do since they were set up in September 2004.
What is the Financial Services Ombudsman's overall role?
It is important to note that as Ombudsman I am independent in my role but I am impartial between complainant and financial services provider. I am empowered to mediate, adjudicate, resolve and where appropriate make awards up to 250,000 for general complaints or 26,000 annuity per annum where the complaint is in respect of an annuity- these maximum limits have been prescribed by the Financial Services Ombudsman Council. Such findings are binding on both parties subject only to appeal to the High Court. In the former voluntary schemes the complainant need not accept the decision and could pursue its case in the Courts whereas the institution could not appeal further. I trust that a culture of appeals by financial services providers will not now arise for reasons I will outline later but under the law any institution can of course exercise that right.
Who can now complain to the Ombudsman?
Those who can now complain as prescribed by the Financial Services Ombudsman Council include all personal customers, limited companies with a turnover of 3,000,000 or less and other unincorporated bodies including partnerships, charities, clubs, trusts etc.
What consumer complaints can be dealt with?
The matters that can be complained of include
The provision of a financial service by the financial service provider
An offer by the provider to provide such a service
Failure by the provider to provide a particular financial service that has been requested
A consumer is not entitled to make a complaint if the conduct complained of
Is or has been before a court or tribunal
Occurred more than six years before the complaint is made
Is within the jurisdiction of the Pensions Ombudsman
Is of a class prescribed by the Council
A complaint may not be investigated by the Ombudsman if in his opinion
It is vexatious or frivolous or not in good faith
The subject matter is trivial
The conduct complained of occurred at too remote a time to justify investigation
Other redress means were available
Complainant had no interest or an insufficient interest in the conduct complained of.
If a complaint is substantiated what redress can the Ombudsman order for the consumer?
The Ombudsman can direct the service provider to do one or more of the following
rectify or change the conduct complained of or its consequences
provide reasons or explanation for that conduct
change that practice
pay compensation up to a maximum of 250,000 or 26,000 annuity
take any other lawful action
What statutory powers can the Ombudsman use?
My Ombudsman's role is a challenging one and I am personally endowed with significant statutory powers such as taking evidence under oath, entering premises, giving an enforceable direction and awarding compensation. The Bureau will aim to deal with matters in a pragmatic and practical manner.
I readily acknowledge the efforts that are being made by many sectors to adhere to proper consumer practices. In any organization systems failures can arise due to a combination of factors including human weakness. How organizations address these weaknesses will be a key factor I take into account when considering whether to use the extensive legal powers available to me as Ombudsman.
In that regard, as in my Data Protection Commissioner's role, I consider that naming organisations in my annual report can be an important part of my function. I may name organisations that were not co-operative, where the situation was very grave and where the complaint should never have come to my office in the first place because of bad complaint handling procedures in the institutions. I may also name instances where complaints were not upheld so as to have balance.
What if the financial services provider refuses to cooperate?
As I have indicated the Ombudsman has extensive legal powers to require the financial services providers to provide information including the power to require employees to provide information under oath. If necessary the Ombudsman can enter premises of providers and demand the production of documents etc. In the case of non compliance the Ombudsman can seek a Court Order. Anyone who obstructs the Ombudsman commits an offence and is liable to a fine of up to 2,000, imprisonment for three months or both. I am pleased to record that to date full cooperation has been received from the banking and insurance sectors under the voluntary schemes, I expect the same from all providers and I hope I will not have to use these powers except in extreme circumstances.
Future development of the Ombudsman role
The Bureau will establish its own unique role and identity in time. In that regard the Bureau will
Be efficient, fair, impartial and practical in its dealings with institutions and complainants.
Be open and communicative to the general public and will put a high emphasis on communicating its role to everyone.
Deal with complaints in a timely manner and will not be afraid to reject ones which are outside its remit or are not relevant.
Dialogue with the institutions and try to solve matters in an amicable manner.
Be proportionate in its findings and award compensation accordingly
Liaise with the Regulator and the Department of Finance when regulatory issues come to notice.
Publish complaints trends on a regular basis.
It will build on the work of the voluntary schemes. The Bureau will observe due process and be impartial. In short it is not and will not be an extra layer of unnecessary regulation but a vital cog in the overall financial services sector which gives enhanced protection for consumers.
Are all complaints being dealt with by Ombudsman?
The Bureau started work on 1st April 2005. It is a new organization but to an extent two existing organizations are being merged and expanded. Sound foundation there already, and in that regard I want to pay tribute to Caroline Gill and Gerry Murphy- the voluntary ombudsmen who are now my deputies and their staff who are now part of the Bureau for the excellent work they have done. Not all complaints could be dealt with from day one but all financial services providers are covered from 1 April 2005.
From 1 April the existing voluntary Ombudsman for the Credit Institutions and the Insurance Ombudsman of Ireland schemes are incorporated into the bureau and complaints-both old and new- are being processed. By 30 June 2005 at the latest the operational dates for dealing with complaints for the expanded services will be published by the Council but all complaints received on or after 1 April 2005 against all sectors will be dealt with in due course.
Guidance leaflets and a new website are ready to roll in a few days.
What is the level of cooperation with the Financial Regulator, the Pensions Ombudsman and internationally?
There must and will be close cooperation between the Bureau, the Financial Regulator and the Pensions Ombudsman. I want to ensure that complaints that are proper to my area are referred to me and naturally when investigating a complaint if a matter comes up that I feel is indicative of some kind of pattern I will inform the Regulator so that appropriate regulatory action may be taken. However, I would like to emphasise that the Financial Services Ombudsman is essentially an arbiter in disputes between customers and institutions and is not a Regulator. I will also cooperate with the Pensions Ombudsman so as to avoid unnecessary overlap in the pension's area. The three organisations are all working together to achieve the same end for consumers and providers and a memorandum of understanding is being drawn up. The Bureau, like the voluntary schemes, are also be part of the EEA Memorandum of Understanding on a cross border Out of Court Complaints Network for Financial Services in the EEA. Let me accordingly thank the Regulator, the Pensions Ombudsman and also the UK Financial Ombudsman Services for their assistance to date and we will build on that for the future.
Complaints and Compliance Culture
Going forward all providers of financial services must treat customers properly and fairly as an ombudsman is the last resort for a complaint before going to Court and should not be necessary if you have good procedures in place. Therefore a better culture of dealing with the consumers in a proper transparent and equitable manner is necessary. Adherence to the Regulator's code of practice for complaints handling will be a matter I will pay attention to when investigating complaints.
In effect we all should have the same aim transparency in our marketing and application forms, honesty, happy customers, complaints when received by any of you are speedily and satisfactorily resolved. Furthermore complaints handling procedures should be a senior level responsibility for every provider. In this scenario business prospers.
In summary I am an independent statutory agency to adjudicate unresolved disputes between complainants and financial services providers. While it will be easy to access it is nevertheless a formal service, independent and impartial between complainant and institution. It will be capable, strong and authoritative in its adjudication. I expect that the Bureau by its actions will be a major part of an enhanced financial services environment for all sectors but above all for the consumer.
As Data Protection Commissioner I have been given a unique insight over the last four plus years into people's lives about how their personal data was used or abused. The matters I dealt with were complex and many financial services complaints arose. I acknowledge the co-operation I received from the sector in my Data Protection Commissioner role and I expect no more or less in my new role.
There has also been excellent relations and cooperation between the institutions covered under the voluntary ombudsman schemes in the past and I expect this to continue.
Accordingly I look forward to working in a spirit of cooperation and harmony with you all over the coming years.
Thank you for your attention.