Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Although there is disagreement on this section, Deputy Doherty's contribution just now has narrowed the ground considerably. I welcome that. The best way to proceed is by reading the formal speaking note. Then we can chat about it and see if we can narrow the ground further so that we can arrive at agreement on Report Stage.

The purpose of the ombudsman is to be a free alternative to the courts system for consumers. The intention of section 7 may have been to improve consumer protection by offering a de novoappeal in the Circuit Court to avoid the expense of the High Court for consumers. That was a worthy intention. However, I have some concerns.

A de novoappeal to the Circuit Court would involve the ombudsman as a notice party only, meaning that if the financial services provider appealed a decision which favoured the complainant, the complainant would have to defend the appeal in the Circuit Court, with all of the attendant expense. The provider is in a considerably stronger position both to go to the Circuit Court and to succeed, due to the lack of inquisitorial powers of the Circuit Court. In the existing statutory appeal to the High Court, the complainant is shielded by the high threshold which is applied to the statutory appeal and by the fact that the Financial Services Ombudsman can be a party to the complaint, and thus take the role of defending its own decision. Neither of these factors operates in a Circuit Court de novoappeal and so the real effect is not only that the provider is in a stronger position on a case-by-case basis, but that the existence of the threat of an appeal by the provider operates as a deterrent to consumers generally.

In addition, in a High Court appeal, the ombudsman can defend his decision as a party to the statutory appeal. This has the effect of protecting the consumer from the costs or threat of costs of a High Court appeal made by the provider. Furthermore, a re-hearing could allow for a situation whereby people use the ombudsman as the first step in litigation before inevitably going before the courts, and taking their case again to the courts if unsuccessful. This could result in a floodgate scenario for the office, which would have implications for staffing and the effectiveness of the office to process and determine complaints. Time limits for appeals are currently set within such limits as the relevant court allows.

Finally, while a Circuit Court appeals process may appear to benefit the consumer as it is cheaper, it should be borne in mind that the Circuit Court can only award in cases up to €75,000, where the ombudsman can award compensation up to €250,000. In addition, the Circuit Court will not hold an investigation, as the ombudsman can. Instead, the consumer will be obliged to prove his or her case de novoto the civil standard, without the benefit of the ombudsman who can look into all the codes of practice and regulatory standards in addition to the facts of the case. On balance, therefore, I do not believe that an appeal to the Circuit Court would provide greater consumer protection.

If this section proceeds to the next stage I wish to put the committee on notice that I may bring forward amendments covering the issues mentioned above and other technical drafting changes on Report Stage. I may also look again at the time limit for appeals to court. I welcome Deputy Doherty's latest intervention. In a movement towards further agreement between us, I could commit to looking again at the time limit of 21 days versus 60 days between now and Report Stage. I will examine the matter seriously and will get my officials to have a discussion with the Deputy. It might be feasible to have an advance on the 21 days while still being short of the 60 days.