Press Release - 18 February 2008

Opening Statement by Joe Meade, Financial Services Ombudsman, to the Joint Oireachtas Committee on Finance and the Public Service - 13 February 2008

Chair and members

I am grateful for the invitation, am pleased to attend and address this hearing. I will make a brief opening statement as to what my role is and what has been achieved to date.

As Financial Services Ombudsman I am a statutory officer who came into being on 1 April 2005. I deal independently with complaints from consumers about their individual dealings with all regulated Financial Service Providers that have not been resolved by the providers after they have been through the internal complaints resolution systems of the providers. As Ombudsman I am therefore the arbiter of unresolved disputes and I am impartial. Broader issues of consumer protection are the responsibility of the Financial Regulator. All personal customers, limited companies with a turnover of €3m or less, unincorporated bodies, charities, clubs, partnerships, trusts etc. can complain to me. It is a free service to the Complainant, compensation up to €250,000 can be awarded and my decisions are binding on both parties subject only to appeal to the High Court.

A context to my role may be of value to the members - Consumers will, and are, entitled to complain. Financial Service Providers will, and do, make mistakes. Against that background, matters that have not been resolved are referred to me. I only receive a small percentage of complaints relative to the total number of financial transactions undertaken but how these are handled by Financial Service Providers is what ultimately matters. Needless to say, I do not uphold every complaint as I am an independent and impartial arbiter of unresolved disputes. I am not a consumer champion or an advocate though my decisions do lead to improvements for consumers. I publish selected Case Studies generally every six months to enlighten everyone as to what type of cases I deal with and what lessons can be learned. My role therefore cannot but enhance the financial services environment.

I will now deal with 2007 activity. During 2007

• 4,374 complaints were received representing an increase of 15% over 2006; a 14% increase arose in 2006 as well
• 1,053 cases were carried forward on 1 January 2007; accordingly my office dealt with 5,427 cases during 2007
• 4,534 cases were concluded after review or investigation
• 2,690 complaints were resolved in Complainants’ favour – 59%
• 10,400 phone calls were received
• 70,000 visits were made to our website
• Many personal callers came to the Office for advice and guidance
• Office administration was highly effective and efficient overall
• Relations and co-operation with Complainants, Financial Service Providers, Financial Regulator, Pensions Ombudsman, National Consumer Agency, Department of Finance and other state agencies were highly satisfactory.

Now a brief word as to what has happened since 2005 -Some 11,553 complaints have been received since we began on 1 April 2005 and at the end of 2007 we had no backlog in clearing complaints. Some 893 complaints were not concluded at year end but this has to be considered with the 1,100 were received during the last quarter of the year. At 31 December 2007, 13 decisions of mine have been appealed to the High Court while another one was subject to judicial review. This represents just 0.17% of cases decided on by me. To date I have had only one decision of mine overturned on appeal - Quinn Direct - but really this was an interpretation by the Courts of the extent of my statutory powers and has not so far impacted adversely on my role.

I should also say that following the settlement in my favour in the Irish Nationwide Building Society Judicial review proceedings full refunds - a significant seven figure sum I understand - have now been made to all other customers following a ‘look back’ exercise undertaken as a result of my decision in the particular complaint. The ‘look back’ was carried out under the general supervision of the Financial Regulator.

As regards Complaints Issues may I add that significant decisions and compensation awards have been made from day one. However, the size of the award is not what matters; rather that the person who has complained and the financial service provider concerned get a fair and impartial decision from me. I have not shirked my responsibility to deal with some extremely difficult and complex cases in a short period of time. I have also expressed serious concerns regarding sales of investment products to the elderly; travel insurance; inappropriate investment advice being given in the sale of properties and matters relating to the sale of income protection policies and permanent health insurance policies.

Finally I will deal with the Funding and staffing of my office - The Office is funded by statutory levy set by my Council with the consent of the Minister for Finance. The Office’s running costs in 2007 were €3.7m while my staff compliment is just 27 but that is sufficient for my requirements. Work increased by 14% and 15% respectively in 2006 and 2007; the cases are getting more complex; levies have to be collected but only 4 extra staff have been taken on since April 2005. In the first few years of operation it was not easy to set a realistic budget as it was difficult to determine what my work load would be; nevertheless for 2008 we did not have to increase the levy. It is regrettable that I have to pursue a small number of intermediaries through the Courts for the non payment of a €125 levy. However, I felt in equity that all financial service providers should pay up the levy and that nobody would escape paying what is laid down by statute. Just to add that my accounts are subject to audit by the C&AG and I have a governing Council, appointed by the Minister for Finance, but it has no role as regards how I deal with complaints.

I will be pleased to answer any questions or comments you have.