Mr. Ger Deering:

Good afternoon Chairman, Deputies and Senators. I am pleased to have the opportunity, together with the deputy Financial Services Ombudsman, Ms Elaine Cassidy, to engage with the committee, as requested, on our three-year change programme, the improvements we have already delivered for our service users and the further reforms we propose to implement. The long established role of an ombudsman is to seek to redress the difference between the resources and expertise available to the individual citizen or consumer and a public body or commercial business. An ombudsman should seek to achieve a fair resolution at the earliest possible stage through flexible and informal procedures. An ombudsman does not just rely on the evidence the parties volunteer. He or she actively investigates cases and makes recommendations or decisions that are based on what is fair in the circumstances, taking account of good practice and fairness as well as legal, regulatory and contractual matters.

The Financial Services Ombudsman, FSO, has jurisdiction to deal with complaints made by a consumer against any regulated financial service provider, including banks, building societies, credit unions, intermediaries, stockbrokers, money lenders, bureaux de change, hire purchase providers, insurance companies and retail credit firms. Our mission is "to resolve disputes between consumers and financial service providers in a fair, timely and impartial manner and to contribute to enhancing the financial service environment for all consumers”. The FSO was established to provide an alternative to the courts for consumers who have unresolved disputes with a financial service provider. The legislation establishing the FSO is very strong in its intent to establish a true alternative to the adversarial court system. It clearly sets out that the principal function of the FSO is "to deal with complaints made under this Part by mediation and, where necessary, by investigation and adjudication". It also sets out that the FSO is "entitled to perform the functions imposed, and exercise the powers conferred, by this Act free from interference by any other person and, when dealing with a particular complaint, is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without regard to technicality or legal form”.

It is clear from the legislation that the intention of the Oireachtas was to establish a system for resolving complaints against financial service providers that is informal and where the preferred method of resolution is mediation and only where necessary, by investigation and adjudication. Yet only a small minority of cases were resolved by mediation prior to 2016, with a very significant number of cases, until then, requiring full investigation and adjudication. In the main, this had come about because of the reluctance of financial service providers to engage in the mediation process. While the Act clearly promotes mediation as the preferred method of resolving complaints, it is not found wanting in providing powers for the FSO in terms of investigating and adjudicating complaints. The Act contains a very wide range of powers available to the FSO where complaints are partly or wholly upheld. I can direct that a financial service provider rectify the conduct complained of and award compensation of up to €250,000 where a complaint is upheld. However, compensation is not the only remedy available from the FSO. I also have powers of rectification. Such rectification can be very significant as it can involve putting a person back to the position where he or she was previously were before the complaint arose. This, in some instances, such as where a home or life insurance policy has been voided or a claim denied, may be more important for the complainant than the compensation. In addition to requiring a financial service provider to rectify the conduct complained of in respect of the particular complainant, I can also require the financial service provider to change a practice relating to that conduct.

The Government has decided to amalgamate the offices of the FSO and the Pensions Ombudsman. This will require enabling legislation. The Department of Finance and the Office of the Attorney General are currently progressing the drafting of the legislation. In the meantime, provision was made in statute to appoint the holder of the post of FSO to the post of Pensions Ombudsman in addition to the post of FSO. I was appointed Financial Services Ombudsman in April 2015 and Pensions Ombudsman in May 2016. In advance of the enactment of the legislation necessary for the merger we are committed 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 Departments of Finance and Social Protection to ensure a smooth amalgamation and the successful delivery of services.

In advance of the proposed amalgamation the FSO bureau is delivering a major change programme. We have just commenced the second year of this ambitious three-year programme of change. This programme, which is fundamentally changing how we manage complaints, is being implemented on foot of the recommendations of a strategic and operational review. The review report, which we published on our website, recommended that we should adopt a more proportionate, informal and preventative approach to dispute resolution. The review involved very considerable engagement with a broad range of stakeholders, with a particular focus on those who had used the services. The feedback indicated a number of challenges that are now being addressed.

These included low levels of service-user satisfaction, due mainly to the formality, complexity and legalistic nature of the processes and the resulting length of time taken to process some complaints.

In 2015 we experienced a very small but welcome increase in the number of mediations, with some very complex disputes being resolved. However, there was still a regrettable reluctance on the part of financial service providers in particular to engage in mediation. This, I am happy to report, changed dramatically in 2016. The review, carried out in 2015, put forward a number of recommendations which are currently being implemented as part of a three-year change programme. As part of this change programme, we have already introduced major changes in how we manage complaints.

The main focus for 2016 was on the introduction of a new dispute resolution service. In 2017 the change programme will focus on our new investigation and adjudication processes and in 2018 we will focus on outreach and awareness. We adopted our new model of dispute resolution in February 2016. This new model involves considerably more interaction with the parties, particularly in terms of speaking with the parties at an early stage of the process with an emphasis on utilising informal approaches. This approach delivers a faster, more efficient and effective service that puts the needs of service users at its core. Informal methods involving mediation, by telephone, e-mail and through meetings, are now the first and preferred option for resolving complaints. However, where these early interventions do not resolve the dispute both parties will continue to have the option of having their complaint independently adjudicated and a legally binding finding, appealable to the High Court, issued. However, parties are now strongly encouraged to engage in mediation in a meaningful manner.

On receipt of a completed complaint form and the final response from the provider, the complaint is referred to a dispute resolution officer. On receipt of the complaint, the dispute resolution officer will contact the complainant and provider to establish the essence of the complaint and seek to resolve it speedily and informally by facilitating a solution that both parties can accept. Dispute resolution officers use a range of mediation interventions including telephone conversations and e-mail, in addition to meetings. This gives both parties the opportunity to develop a shared understanding of the complaint and to work towards reaching a swift and fair solution. While dispute resolution officers help to facilitate a resolution, they do not take sides, apportion blame or judge who is right or who is wrong. By engaging with the parties directly, it is possible to capture the detail behind the issue in the manner best suited to the parties involved and achieve a timely and satisfactory resolution.

A total of 2,491 complaints were resolved by our dispute resolution team through this new process in 2016. If a settlement is not reached within the dispute resolution service, the matter will be progressed to investigation and, ultimately, to adjudication. This is a more formal and lengthy process as all the evidence must be gathered, exchanged and considered in accordance with fair procedures. Having gathered the evidence and exchanged the evidence and submissions between the parties, the evidence and submissions are considered and a preliminary finding is issued to both parties. If the parties make no further submissions in response to the preliminary finding, a legally-binding finding in the same terms will be issued and the file will be closed. If either or both parties make further substantive submissions that identify possible errors of law or significant additional points of fact, these submissions will be reviewed and will be made available to the parties, where necessary, before a legally-binding finding is issued.

The preliminary finding is an additional new step that we have introduced this year. It gives an indication of the ombudsman's final decision and provides parties with the opportunity to correct any potential or perceived errors of fact or bring to light other evidence that was not previously made available. Of necessity, the adjudication process is more formal than the dispute resolution process. This means that complaints that go to investigation and adjudication will take considerably longer to resolve. In addition, they will occasionally require an oral hearing where evidence is taken under oath.

Findings issued by the ombudsman are legally binding on both the complainant and the provider. Either party can appeal a finding of the FSO to the High Court. We are hopeful that the introduction of the preliminary finding will reduce the number of appeals. An information booklet on how to make a complaint to the FSO, is available on the "other quick guides" section of our website, www.financialombudsman.ie. Our services are provided by the Financial Services Ombudsman's Bureau, which comprises the Financial Services Ombudsman, the deputy ombudsman and the management and staff. It is a statutory body funded by levies from the financial service providers. I want to pay tribute to the management and staff of the bureau who have demonstrated a huge flexibility and commitment to quality customer service during what has been an extraordinarily busy and productive period of change. They are, in my view, a great example of public servants focused on, and committed to, responding to the needs of service users.

As we say as Gaeilge, "Tús maith, leath na hoibre". We believe we have made a very good start to our change programme. This view has been affirmed through feedback from those who use our services. With the continued commitment of all concerned, we believe we can continue to improve the service we provide in the coming years and we look forward to implementing the next phases of our change programme. It is only by listening to our stakeholders, particularly those who have used our service, that we are able to continuously meet their needs and expectations. It was for this reason that we surveyed complainants and service providers in 2015 and again in 2016. The feedback from the 2015 survey identified the changes we needed to make. The survey of complainants and providers who used the new dispute resolution service in the first half of 2016 has provided an early, positive endorsement of the effectiveness of the new service. The results indicate that the newly implemented processes are working well and that changes made have had a positive impact. The feedback shows us that we have built strong foundations on which we can continue to develop the service and improve how complaints are managed. We will continue to survey users of our service to monitor satisfaction levels on an ongoing basis and we will publish the findings of these surveys annually.

I assure the committee that, together with our team, the deputy ombudsman and I will continue to review and improve our services in order to contribute to the enhancement of the financial service environment for all consumers. We will also continue to play our part in providing redress for complainants where we are of the view that the conduct of their financial service provider was contrary to law, unreasonable, unjust, oppressive or improperly discriminatory. I thank members for the opportunity to engage with them today. Ms Cassidy and I would be happy now to deal with any questions that arise.