Joe MeadeJoe MeadeWorld Bank Workshop Bratislava -13 June 2007World Bank Workshop Bratislava -13 June 2007

What is an Ombudsman?What is an Ombudsman?

An independent and impartial means of An independent and impartial means of resolving disputes outside the courts.resolving disputes outside the courts.

Investigates matters after a complaint that has Investigates matters after a complaint that has been made to the financial service provider has been made to the financial service provider has not been resolved to the complainant’s not been resolved to the complainant’s satisfaction.satisfaction.

2006 complaints2006 complaints

InsuranceInsurance

Insurance* 1886 Insurance* 1886

Health 100 Health 100

Intermediaries 142 Intermediaries 142

Others Others 101101

Total 2229Total 2229 *Non life 1289*Non life 1289

Life 597Life 597

Credit InstitutionsCredit Institutions

Banks 1302 Banks 1302

Building Socs. 116 Building Socs. 116

Credit Unions 33 Credit Unions 33

Stockbrokers 30 Stockbrokers 30

Intermediaries 54 Intermediaries 54

Others Others 3131

Total 1566Total 1566

Complaints trendsComplaints trends

Complaints received since April 2005Complaints received since April 2005 InsuranceInsurance Credit InstitutionsCredit Institutions

2007 –End May 950 750 (+21% over 2006 period)2007 –End May 950 750 (+21% over 2006 period)

2006 2229 15662006 2229 1566

April 05 – December 05April 05 – December 05 1734 870 1734 870

14% increase in 2006 with a 37% for credit institutions-credit unions, stockbrokers, intermediaries account for 14% increase in 2006 with a 37% for credit institutions-credit unions, stockbrokers, intermediaries account for some of thissome of this

60% of complaints upheld; 40% not upheld60% of complaints upheld; 40% not upheld

Travel insurance is largest area of complaint followed by motor and life assurance Travel insurance is largest area of complaint followed by motor and life assurance

Account transactions, mortgages and credit cards are the largest credit institutions complaints Account transactions, mortgages and credit cards are the largest credit institutions complaints

33 Credit union,30 stockbrokers and 200 intermediaries complaints included in the 2006 figures33 Credit union,30 stockbrokers and 200 intermediaries complaints included in the 2006 figures

Why have a Financial Services Why have a Financial Services Ombudsman?Ombudsman?

Voluntary ombudsman schemes in Ireland both for the credit institutions Voluntary ombudsman schemes in Ireland both for the credit institutions and parts of the insurance sector since the early 1990s.and parts of the insurance sector since the early 1990s.

Recognition by these sectors that a complaints resolution process Recognition by these sectors that a complaints resolution process outside of the Courts was necessary and appropriate. outside of the Courts was necessary and appropriate.

However all financial service providers were not part of these However all financial service providers were not part of these

Financial scandals in Ireland during the 1990sFinancial scandals in Ireland during the 1990s

McDowell Report 1999-new Regulatory regime including a McDowell Report 1999-new Regulatory regime including a statutory statutory Financial Ombudsman. Financial Ombudsman.

The Central Bank and Financial Services Authority of Ireland Act 2004The Central Bank and Financial Services Authority of Ireland Act 2004

Section 16 and Schedules 6 and 7.Section 16 and Schedules 6 and 7.

What is the Financial Services What is the Financial Services OmbudsmanOmbudsman

Statutory Statutory body funded by body funded by statutorystatutory levies from the levies from the financial services providersfinancial services providers

Operational on 1 April 2005. Operational on 1 April 2005.

Existing voluntary schemes were subsumed into itExisting voluntary schemes were subsumed into it

Number of financial service providers covered by its Number of financial service providers covered by its remit was expanded considerably. remit was expanded considerably.

What is the role of the Financial What is the role of the Financial Services Ombudsman?Services Ombudsman?

TheThe Financial Services Ombudsman Financial Services Ombudsman is a statutory is a statutory officer whoofficer who deals independently with complaints from deals independently with complaints from consumers about their individual dealings with all consumers about their individual dealings with all financial services providers that have not been resolved financial services providers that have not been resolved by the providers. Decisions can be appealed by either by the providers. Decisions can be appealed by either party to the High Court. party to the High Court.

The Ombudsman is therefore the arbiter of unresolved The Ombudsman is therefore the arbiter of unresolved disputes and is impartial.disputes and is impartial.

It is a free service to the complainant. It is a free service to the complainant. Broader issues of consumer protection are the Broader issues of consumer protection are the

responsibility of the Financial Regulator.responsibility of the Financial Regulator.

What organisations can be subject to What organisations can be subject to investigation by the Ombudsman?investigation by the Ombudsman?

All financial service providers (FR and Cr) including:All financial service providers (FR and Cr) including: BanksBanks Building SocietiesBuilding Societies Insurance companies both life and generalInsurance companies both life and general Credit UnionsCredit Unions Mortgage, Insurance and other credit intermediariesMortgage, Insurance and other credit intermediaries StockbrokersStockbrokers PawnbrokersPawnbrokers MoneylendersMoneylenders Bureaux de changeBureaux de change Hire Purchase providersHire Purchase providers Leasing companiesLeasing companies Credit sales companiesCredit sales companies Health Insurance companiesHealth Insurance companies

Who can complain to the Financial Who can complain to the Financial Services Ombudsman?Services Ombudsman?

All personal customers All personal customers Limited companies with a turnover of €3m Limited companies with a turnover of €3m

or less or less Unincorporated bodies, charities, clubs, Unincorporated bodies, charities, clubs,

partnerships, trusts etc.partnerships, trusts etc.

What complaints can be dealt with?What complaints can be dealt with?

Any kind of complaint by consumers where they Any kind of complaint by consumers where they feel they have not got satisfaction about:feel they have not got satisfaction about:

The provision of a financial service by the The provision of a financial service by the financial service providerfinancial service provider

An offer by the provider to provide such a An offer by the provider to provide such a serviceservice

Failure by the provider to provide a particular Failure by the provider to provide a particular financial service that has been requestedfinancial service that has been requested

What complaints cannot be What complaints cannot be made?made?

A consumer is not entitled to make a complaint if A consumer is not entitled to make a complaint if the matter complained of: the matter complained of:

Is or has been the subject of legal proceedings Is or has been the subject of legal proceedings before a court or tribunalbefore a court or tribunal

Occurred more than six years before the Occurred more than six years before the complaint is madecomplaint is made

Is within the jurisdiction of the Pensions Is within the jurisdiction of the Pensions OmbudsmanOmbudsman

Can the Ombudsman decline to Can the Ombudsman decline to investigate a complaint?investigate a complaint?

A complaint may not be investigated by the A complaint may not be investigated by the Ombudsman if in his opinion:Ombudsman if in his opinion:

It is vexatious or frivolous or not in good faithIt is vexatious or frivolous or not in good faith The subject matter is trivialThe subject matter is trivial The conduct complained of occurred at too The conduct complained of occurred at too

remote a time to justify investigationremote a time to justify investigation Other redress means were availableOther redress means were available Complainant had no interest or an insufficient Complainant had no interest or an insufficient

interest in the conduct complained ofinterest in the conduct complained of

If a complaint is upheld what redress can If a complaint is upheld what redress can the Ombudsman order for the consumer?the Ombudsman order for the consumer?

The Ombudsman can direct the service provider to The Ombudsman can direct the service provider to do one or more of the following:do one or more of the following:

Review, rectify ,mitigate or change the conduct Review, rectify ,mitigate or change the conduct complained of or its consequencescomplained of or its consequences

provide reasons or explanation for that conductprovide reasons or explanation for that conduct change that practice change that practice pay compensation up to a maximum of €250,000 pay compensation up to a maximum of €250,000

or €26,000 annuityor €26,000 annuity take any other lawful actiontake any other lawful action

What if financial service providers What if financial service providers refuse to cooperate?refuse to cooperate?

The Ombudsman has extensive legal powers to require The Ombudsman has extensive legal powers to require the financial service provider to provide information the financial service provider to provide information including the power to require employees to provide including the power to require employees to provide information under oath.information under oath.

If necessary the Ombudsman can enter premises of If necessary the Ombudsman can enter premises of providers and demand the production of documents etc. providers and demand the production of documents etc.

In the case of non compliance the Ombudsman can seek In the case of non compliance the Ombudsman can seek a Court Order. a Court Order.

Anyone who obstructs the Ombudsman commits an Anyone who obstructs the Ombudsman commits an offence and is liable to a fine of up to €2,000, offence and is liable to a fine of up to €2,000, imprisonment for three months or both.imprisonment for three months or both.

Financial Consumer Protection in an Financial Consumer Protection in an Irish contextIrish context

Central BankCentral Bank Financial RegulatorFinancial Regulator Financial Services Ombudsman and Pensions Financial Services Ombudsman and Pensions

OmbudsmanOmbudsman Prudential rolePrudential role Consumer roleConsumer role Statutory Consumer Protection CodeStatutory Consumer Protection Code Surveys and PublicitySurveys and Publicity Liaison with OmbudsmanLiaison with Ombudsman

Co-operation with the Financial Regulator, the Co-operation with the Financial Regulator, the Pensions Ombudsman and the Financial Services Pensions Ombudsman and the Financial Services

OmbudsmanOmbudsman Close co-operation between the Ombudsman, the Financial Regulator and Close co-operation between the Ombudsman, the Financial Regulator and

the Pensions Ombudsman. the Pensions Ombudsman.

When investigating a complaint if a matter comes up that is felt to be When investigating a complaint if a matter comes up that is felt to be indicative of some kind of pattern or a systemic matter, the Ombudsman will indicative of some kind of pattern or a systemic matter, the Ombudsman will inform the Regulator so that appropriate regulatory action may be takeninform the Regulator so that appropriate regulatory action may be taken. . 

However, would like to emphasise that the Financial Services However, would like to emphasise that the Financial Services Ombudsman is essentially an arbiter in disputes between customers Ombudsman is essentially an arbiter in disputes between customers and institutions and is not a Regulator.and institutions and is not a Regulator.

Also cooperate with the Pensions Ombudsman so as to avoid unnecessary Also cooperate with the Pensions Ombudsman so as to avoid unnecessary overlap in the pension’s area. Pensions Ombudsman deals with overlap in the pension’s area. Pensions Ombudsman deals with occupational pensions disputes but not their sales. occupational pensions disputes but not their sales.

A memorandum of understanding has been signed by the three A memorandum of understanding has been signed by the three organisationsorganisations

Ombudsman considerationsOmbudsman considerations Did you act fairly and can you prove that to me-transcripts or tapesDid you act fairly and can you prove that to me-transcripts or tapes Was the investment advice appropriateWas the investment advice appropriate Was documentation clearWas documentation clear Did you take advantage of a particular situation-troublesome Did you take advantage of a particular situation-troublesome

customer or vulnerable personcustomer or vulnerable person Were the refusal reasons reasonable or justifiedWere the refusal reasons reasonable or justified Too zealous perhaps in applying money laundering aspectToo zealous perhaps in applying money laundering aspect Did you take advantage of a person’s ageDid you take advantage of a person’s age Were you discriminatory because of another matter perhaps-deeds Were you discriminatory because of another matter perhaps-deeds

of houseof house Was commission more important than necessity-PPIWas commission more important than necessity-PPI Was complaint dealt with properly and reasonably at all stagesWas complaint dealt with properly and reasonably at all stages Duty of care goes both waysDuty of care goes both ways Would I be happy-or could I defend- if I was the customer who was Would I be happy-or could I defend- if I was the customer who was

refused service or not properly treatedrefused service or not properly treated

Ombudsman’s decisionsOmbudsman’s decisions Penalty interest charge on early Penalty interest charge on early

redemption of commercial loans-redemption of commercial loans-judicial review on one of the cases not judicial review on one of the cases not successful; look back by Building successful; look back by Building Society €5m+ Society €5m+

Application of accounting adjustment Application of accounting adjustment to an investment fund- €7.4m to an investment fund- €7.4m compensation awarded- under Court compensation awarded- under Court appealappeal

Insurance matter-appeal on look backInsurance matter-appeal on look back Error by insurance brokers- €140,000 Error by insurance brokers- €140,000

and €50,000 settlementsand €50,000 settlements €€40,000 against a stockbroker for not 40,000 against a stockbroker for not

acting on instructionsacting on instructions €€16,500 – conflict of interest mortgage 16,500 – conflict of interest mortgage

broker in sale of a propertybroker in sale of a property €€90,000 insurance award as only 90,000 insurance award as only

Courts can determine whether an Courts can determine whether an illegal had occurredillegal had occurred

Phone records accessPhone records access

€€80,000 claim for storm damage not 80,000 claim for storm damage not upheld on technical adviceupheld on technical advice

Credit Unions- €24,000 for not Credit Unions- €24,000 for not respecting elderly persons instructions respecting elderly persons instructions

€€38,500 award re derivative 38,500 award re derivative investment advice to elderly investment advice to elderly

Medical treatment abroad- prior Medical treatment abroad- prior approval and not upheldapproval and not upheld

Courts and International Courts and International comparisonscomparisons

Informal by nature and legislation- without regard to technicality or legal form ( 57BK Informal by nature and legislation- without regard to technicality or legal form ( 57BK 4)4)

DirectionsDirections

Judicial reviewJudicial review

AppealsAppeals

Point of law referral during investigationPoint of law referral during investigation

Evidence under oath Evidence under oath

Enforcement ordersEnforcement orders

Injunctive powersInjunctive powers

Ireland's Ombudsman is significantly different to all other countries-voluntary Ireland's Ombudsman is significantly different to all other countries-voluntary schemesschemes

What is neededWhat is needed IndependentIndependent Strong and unpopular if necessaryStrong and unpopular if necessary Removal not to be an easy matterRemoval not to be an easy matter Adequately Resourced Adequately Resourced Strong PowersStrong Powers Financial ResourcesFinancial Resources Fair and impartialFair and impartial No Confusion about role-not an advocate or a No Confusion about role-not an advocate or a

champion but an independent arbiterchampion but an independent arbiter Appropriate to your custom and legal situationAppropriate to your custom and legal situation

Contact DetailsContact Details

Financial Services Ombudsman

3rd Floor

Lincoln House, Lincoln Place

Dublin 2

Ireland Lo Call: 1890 88 20 90

Tel: +353 1 6620899Fax: +353 1 6620890

Public Office Hours09.30hrs - 13.00hrs14.00hrs - 17.00hrs

Email enquiries@financialombudsman.ieEmail enquiries@financialombudsman.ie

Website www.financialombudsman.ieWebsite www.financialombudsman.ie