Press Release - 03 December 2009

Launch of the Chartered Institute for Securities and Investment Risk in Financial Services Qualification

Speaking notes by Joe Meade, Financial Services Ombudsman, at the launch on 3 December 2009 of the Chartered Institute for Securities and Investment Risk in Financial Services Qualification

I retire at year end as Financial Services Ombudsman and it is indeed a pleasure and appropriate to be here this evening at the launch of the Chartered Institute for Securities and Investment Risk in Financial Services Qualification. It is a great benefit that the training and courses will now be done in Ireland and I wish BPP Professional Education success in its endeavours as the Accredited Training Provider.

The laudable aim of this qualification is to ensure that people who operate in the financial services industry have the qualifications required to assist them in operating to the highest ethical and professional standards. Risk in financial services is always there and is not something to be decried but how it is carried out and properly managed is what really matters. Reckless risk taking and lack of controls are not what it is about as ultimately we all pay for this bad behaviour and management failure or perhaps a blind eye being turned when profits appear to be on the up. Coupled with the other training courses undertaken by LIA, Institutes of Insurance and Bankers, the Financial Planning Standards Board etc I consider it is testament not alone to the success of the courses but the efforts being made by all bodies to ensure that they are relevant to current needs and expectations of everyone.

We should all be aware of the statutory position in Ireland - Statutory Financial Regulator soon to be enhanced with the new Central Bank Commission, Statutory Consumer Protection Code, and Statutory Ombudsmen for Pensions and Financial Services with teeth as well as statutory Minimum Competencies Requirements for staff. How many other countries have this level of statutory requirements and may I say they all have made a difference both for the industry and for consumers?

Irrespective of whether it is a requirement of the Financial Regulator to have minimum competencies, appropriate professional courses would have to be provided anyway by the industry as indeed they were over the last 20 years or so. The fact that so many study for exams and attend courses in their spare time is even more reassuring to me as Ombudsman. In any walk of life acquiring knowledge and keeping up to date with new developments is necessary for the best performance of one’s tasks. Your qualification will only enhance that. However, no matter how well qualified anybody is, it is how you exercise your functions that is important. In that regard, common sense is always a necessary part of any business operation and flexibility must also be there to deal with particular circumstances in an even handed manner. Life never stands still and we all have to keep up to date with emerging problems and ideas. We must also learn from experiences and some of the bad practices exposed in the last few years do no credit to anyone and must not be repeated. Indeed I hope every financial institution worldwide has done a root and branch review of its activities and strengthened its risk profiling areas.

You are all no doubt conscious of the actions taken by me as Ombudsman, over the last five years almost to ensure that consumers are treated in a fair, transparent and impartial manner. Accordingly in the next year if any complaints are received by my successor where the sale of products have been undertaken by people who do not have the necessary competencies then that can be a good ground prima facia for upholding a complaint and awarding compensation. Not alone do I as Ombudsman but I suggest everyone expect and demand the highest ethical and standards of integrity from financial services. Bear in mind you are trusted with people’s hard earned money , never forget that and act with highest integrity . In short no qualification or necessary competency means no advisory service in reality.

In these days where costs are being monitored and cut it would be also very very foolish for industry to try and save costs or not provide study time as ultimately an unprofessional or untrained work force will only cause problems for everyone in future. Why should the financial industry not aim to be the best providers of advice to its clients as this can only be achieved with a dedicated and professional workforce? Would you tolerate an expensive service for your car if it was not carried out by trained and competent people? Bear in mind also that you extensively advertise your services as being of benefit to people and if you provide bad service you may have made a short term gain but long-term you deserve and will be a failure.

As regards my role as Financial Services Ombudsman I am a statutory officer though not a consumer advocate or a consumer champion. As an independent statutory office, established on 1 April 2005, as Financial Services Ombudsman I ensure that unresolved complaints from customers of financial service providers are mediated, investigated and adjudicated on in an impartial and independent manner. I can in addition to rectifying matters make compensation awards up to €250,000 – my findings are binding on both parties subject only to appeal to the High Court. I must deal with matters in private but I publish selected unnamed Case Studies generally every six months to enlighten everyone as to what type of cases I deal with and what lessons can be learned- last Tuesday's publications showed the worst and the best practices in the industry and lessons must be learned. Specifically when you read the ones about investment practices and stockbrokers actions you wonder if we have learned anything about how to treat consumers fairly. My actions to date have caused significant improvements to be effected in the industry; I have made major awards of compensation in individual instances while other consumers also got major refunds when a systemic problem arose. In summary I have received over 25,000 complaints since April 2005 and about €60m has been refunded to consumers as a result of my work while the knock on effect must be large. I say this not in any way to justify my existence or as a boast but really it only arose as a direct result of complaints being investigated impartially by me and where customers were not treated fairly. 34% increase in complaints this year alone to 7,200 says something to you all.

I am dealing with people as are you also. That is not an easy task on occasions I can assure you all. People are not stupid and demand respect also. Naturally you will not satisfy all of the people all of the time but you must strive to have a happy customer as that cannot but be good for business. In an industry where large volumes of transactions take place, where complex products are sold, where investments are falling and where institutions are dealing with human beings, it would be abnormal if some complaints could not be resolved without assistance from me.

Financial Service Providers will, and do make mistakes. Everybody, not just compliance officers I emphasise, have to play their part in treating customers fairly. Issues not resolved are referred to me and while it must be acknowledged that I only receive a small percentage of complaints relative to the total number of financial transactions undertaken, how these are handled by the Providers is what ultimately matters. Many have not passed this test well since April 2005 alas.

The era when financial institutions could take advantage of anyone and also not disclose conflicts of interest is over as far as I am concerned. Risk taking is fine when properly operated. I have not hesitated to award appropriate compensation and publicise such matters and my successor will do likewise. However I know and welcome the fact that your industry is making strenuous efforts to prevent such abuses happening in the future but even one to arise is alas one too many. Today’s formal launch of your qualification will hopefully prevent that in most cases. It also demonstrates a very good and positive side to the financial services sector-hence my reason to speak and launch it.

I wish you every success in your efforts and aim to make my successor’s life an easy and not too busy one.