Mr. Ger Deering:

I am pleased to have the opportunity, together with the deputy Financial Services Ombudsman, Elaine Cassidy, to engage with the committee this morning on our 2017 strategic plan. We also welcome the opportunity to engage with the committee on the issue of tracker mortgages.

First, I will give a brief outline of our strategy. It is important to begin by letting the committee know we have just commenced the second year of an ambitious three-year programme. In 2017 we will continue to adapt our processes in response to feedback received from service users. The three-year change programme was devised following the completion of an independent strategic and operational review into the operation of the offices of the Financial Services Ombudsman and the Pensions Ombudsman. This review was commissioned jointly by the then Pensions Ombudsman, Paul Kenny, and I. The review report, which is available on our website, recommended that we should adopt a more proportionate, informal and preventative approach to dispute resolution. Having consulted widely with stakeholders including those who had made complaints against financial service providers, the review delivered a number of key recommendations at the end of 2015 which we commenced implementing in February 2016. This involved a major change programme, which commenced in February 2016. This has delivered significant change in how we manage complaints. As a result of these changes, we now undertake considerably more direct interaction with both consumers and providers to deliver a faster, more effective and efficient service.

Our 2017 strategy will continue to raise the bar on consumer protection and complaint handling through the use of mediation techniques and, where disputes are not resolved by agreement between the parties, through fair and impartial investigation and adjudication. I am happy to report high levels of satisfaction from those using the new service. A structured survey of both complainants and providers who use the new dispute resolution service has provided a positive endorsement of the effectiveness of the service. The results prove that the newly implemented processes are working well and that the changes have had a positive impact. The feedback shows us that we have laid a strong foundation on which we will continue to develop our services and improve how we interact with our stakeholders. Our strategy for 2017 seeks to build on that firm foundation as we continue to improve our services into the future.

As the committee will be aware, the Government has decided to amalgamate the offices of the Financial Service Ombudsman and Pensions Ombudsman. We engaged with the committee in October last year as part of the pre-legislative scrutiny of the Financial Services and Pensions Ombudsman Bill which, when enacted, will provide the legislative basis for the merger. We also engaged on that occasion with the committee on Deputy Doherty's Private Members' Bill relating to the Financial Services Ombudsman.

I was appointed Financial Services Ombudsman in April 2015 and I was appointed Pensions Ombudsman in May 2016 under the Social Welfare and Pensions Act. I currently hold both of those offices in separate capacities under the relevant legislation. My colleague, Ms Cassidy, was appointed deputy Financial Services Ombudsman in January 2016. She is the deputy ombudsman-designate for pensions. As the current legislation does not provide for a deputy Pensions Ombudsman, she will not assume that element of her role until the necessary legislation is enacted. We look forward to amalgamating fully both offices when the legislation is enacted and look forward to the enactment of other legislative measures that would bring greater protection for consumers. In advance of the enactment of the legislation necessary for the merger, our 2017 strategy commits us to doing everything we can to make the amalgamation a success. Both offices are now co-located and work in close co-operation, albeit under separate legislative provisions. We are actively working with the Department of Finance and the Department of Social Protection to ensure a smooth amalgamation and successful and seamless delivery of the services.

Our core objectives, as set out in our strategic plan, are to operate an efficient, effective and fair dispute resolution process that mediates, investigates and adjudicates on consumer complaints; to provide an excellent customer service; to raise awareness of our work among the public and our stakeholders; to promote compliance by financial service providers with best practice in the provision of products and services; to support and develop the skills and competences of our staff in order to offer the best service to our users; to support the Financial Services Ombudsman council in its work; and to liaise with the Central Bank of Ireland, the Department of Finance, Oireachtas committees and other relevant bodies in order to improve the financial services market for consumers. For each of these objectives, our 2017 strategy sets out key performance indicators and identifies the timeline and critical success factors. The 2017 strategic plan has been developed by focusing on 2017, while also bearing in mind future years.

We will be happy to engage with the committee and answer any questions members have on the strategic plan, but before that I will use the remaining time to provide the committee with some information on tracker mortgages.

The long and well established role of an Ombudsman is to seek redress, to redress the difference in power and resources between the individual or the citizen and large institutions when resolving disputes. This is particularly important when dealing with the inequality of arms that exists between a consumer and a financial service provider. A time limit of six years for making complaints to the Financial Services Ombudsman is set out in the current legislation. Both the Financial Services and Pensions Ombudsman Bill and Deputy Doherty's Private Members' Bill, which were considered by the committee last October, proposed an extension to the time limits for complaints. We would very much welcome such an extension as it could be particularly beneficial in respect of complaints relating to mortgages or financial products with a medium to long-term life span.

Where I uphold a complaint, I have a wide range of powers available to me. I can direct a financial service provider to pay compensation of up to €250,000. I can also direct rectification. Such rectification can be very significant as it can involve putting a person back in a position that they were in before the complaint arose. In some instances, such as where a person was denied a tracker mortgage or the incorrect interest rate was applied, this may potentially be more important than any compensation offered. The office of the Financial Services Ombudsman has played an important role in tracker issues to date. I assure the committee that I will use the extensive powers available to me to ensure that customers of financial service providers who do not receive their entitlement and who are treated unfairly will have access to redress through our office. I will not be found wanting in using these powers as they were intended by the Oireachtas where I find the conduct of the financial service provider to be contrary to law, unreasonable, unjust, oppressive or improperly discriminatory.

I consider it beneficial to provide the committee with a brief background to the key events and timelines relating to tracker mortgages. The Financial Services Ombudsman first began to receive complaints regarding tracker mortgages in 2009. In fact, it might be more correct to say the end of 2008. We first started dealing with them in 2009 but we received a small number of complaints in 2008. The 2009 annual report of the then Financial Services Ombudsman included a case study involving a borrower who had been wrongly given the entitlement to return to a tracker rate following a period of fixed interest rate.

In 2009, 2010 and 2011, the Financial Services Ombudsman upheld a number of complaints and directed financial institutions to put complainants back on tracker mortgages. Some of these findings were challenged in the High Court. Of particular note, PTSB appealed four findings of the Financial Services Ombudsman to the High Court in 2011. All four of these findings, issued by the Financial Services Ombudsman in July and August 2011, had directed the bank to reinstate the complainants' tracker mortgages. In August 2012, the High Court delivered judgment in all four cases. Two of the complaints were remitted back to the Financial Services Ombudsman for further consideration, while the bank was unsuccessful in the remaining two appeals. In October 2012, the High Court gave PTSB leave to appeal to the Supreme Court against those two findings. These two appeals were listed for hearing by the Supreme Court on 16 February 2015. However, when they were listed for mention by the Court on 5 February 2015, they were withdrawn by the bank. It was around this time that the Central Bank had commenced an enforcement investigation of PTSB, which resulted in some customers being returned to tracker mortgages and receiving redress.

Shortly after I was appointed in 2015, I commenced a comprehensive analysis of tracker mortgage complaints which had been decided by the Financial Services Ombudsman between 2009 and July 2015. The aim of this analysis, which covered almost 500 findings over that period, was to inform the Central Bank of the various issues relating to tracker mortgages that the Financial Services Ombudsman had encountered. We worked in co-operation with the Central Bank in line with the memorandum of understanding in place between the organisations and I presented the analysis to the Central Bank in November 2015. I understand that this information was of assistance to the Central Bank in scoping the examination currently under way in all the banks. As the committee is aware, the objective of the examination is to ensure that lenders conduct a complete review of their mortgage loan books to assess compliance with both contractual and regulatory requirements relating to tracker mortgages and, in situations where customer detriment is identified from the examination, to provide appropriate redress and compensation so as to ensure fair outcomes for customers of those lenders. I support fully this objective of the Central Bank and my office has worked in close co-operation with it to ensure any information we hold that is useful in achieving this objective is made available to the bank.

I became aware in early 2016 from correspondence sent to a complainant who had received a finding from the Financial Services Ombudsman by her bank that at least one bank proposed to exclude customers who had brought complaints to the Financial Services Ombudsman from the examination. On becoming aware of this, I wrote to the CEOs of all the banks informing them that I was firmly of the view - which is shared by the Central Bank - that no mortgage holder who has made a complaint to the Financial Services Ombudsman should be treated any differently with regard to the examination by virtue of the fact of having made such a complaint, irrespective of the outcome. I secured confirmation from each bank that no mortgage account holder coming within the scope of the examination will be treated any differently by the bank because a complaint has been made to the Financial Services Ombudsman.

Prior to and throughout the examination process, we have worked closely with the Central Bank and are in ongoing communication with complainants who have complaints with our office regarding their bank relating to tracker mortgages. We are currently dealing with approximately 400 complaints relating to tracker mortgages. In the vast majority of these, the mediation or investigation and adjudication of the complaint has been put on hold pending the outcome of the Central Bank examination. The reason for this is twofold. First, it will ensure that the Financial Services Ombudsman will have the fullest information available in arriving our decisions following an investigation and adjudication of the complaints because we will be able to take into account that additional information. Second, it will ensure that complainants will remain and continue to have the right to have their complaint considered by the Financial Services Ombudsman if they are unhappy with the examination as it relates to them, which is very important.

If, having had his or her complaint on hold with the Financial Services Ombudsman, FSO, a complainant receives a proposal from their bank and the complainant advises the FSO that he or she is satisfied with that offer we will note that the matter has been settled and our file will be closed. If, on the other hand, having put the complaint on hold with the FSO a complainant receives a proposal from his or her bank that is not acceptable or no proposal is offered, we then can progress the complaint. There are a number of potential complaints we believe may arise following the completion of the examination process which the FSO may have to deal with. These could include complaints that a person was not returned to his or her tracker mortgage at all or that they were not returned to a tracker mortgage at the correct time or at the correct margin. Further, a complainant may well be returned to his or her tracker mortgage at the right rate and right time but may not be satisfied with the level of compensation offered. Indeed, there may also be complaints about the process itself, for instance, the manner in which the claim for redress was dealt with as part of the examination. I remind the committee of the assurances I gave here last October, that I am, along with the deputy ombudsman and our entire team, fully committed to using any powers afforded to the proposed financial services and pensions ombudsman, our existing powers and any enhanced powers given by the Oireachtas to the fullest possible extent.

I can assure the committee that together with my team, I will play my part in providing redress for complainants to the FSO where I am of the view that the conduct of their financial service provider was contrary to law, unreasonable, unjust, oppressive or improperly discriminatory. I thank the Chairman and members for the opportunity and we are happy to take any questions.