Ms MaryRose McGovern:

I thank the Deputy. Coming back to crypto-assets, the first point I would like to highlight is that they are not a regulated product. Any issue arising out of cryptocurrency, therefore, is not necessarily a complaint that can be made to our office. One can see from the case studies that we have published in the overview that, in most instances, the reason a complaint came to the office was because, after money had been transferred, the nature of the complaint was one against that person's bank for having transferred the money, or for failing to successfully charge back or pullback the money after a single euro payments area, SEPA, or Society for Worldwide Interbank Financial Telecommunication, SWIFT, transfer. Insofar as the providers of cryptocurrency are concerned, however, this office has no jurisdiction because they are not regulated financial service providers.

Having said that, the market in crypto-assets, MiCA, regulation is making its way through Europe at the moment. However, I do not expect it to become effective until 2023-2024. Even at that stage, there will be a transitional period of, I believe, 18 months. This is not something that will happen overnight. The approach to be adopted with the MiCA regulation is a little bit like the markets in financial instruments directive, MiFID, with a cooling off period and an actin-in-the-best-interests-of-the-customer approach, but we are a long way from that. One of the issues with investing is that consumers who are going online will not find themselves necessarily investing with providers that will be covered under MiCA or regulated by any particular competent authority.

This is probably a good opportunity to say that the office expects regulated financial service providers to take the steps to establish suitability with their customers as to whether a product is regulated. I say that because although the office does not have jurisdiction over unregulated financial service providers, there are some regulated financial service providers that also make unregulated product offerings. In that context, before introducing an unregulated product, we would expect the regulated providers to ensure that they have established suitability. From a consumer point of view, it is very important to take the time to try to develop an understanding as to who one is engaging with, are they regulated or unregulated, will one have the benefit of the consumer protection framework if something goes wrong, and will one be able to make a complaint to the Financial Services and Pensions Ombudsman?

The Deputy mentioned young men, and why this is happening. It certainly appears that the ability to use one’s mobile phone makes this a very friendly, easy and comfortable interaction. We carry our mobile phones around in our pockets. They do not threaten us and seem like perfectly trustworthy devices. Being able to engage online in what appears to a person to be an investment platform with a view to earning money or finding some way to yield some profit creates, perhaps, a comfortable space, whereas one might otherwise perhaps think twice about taking some of those steps to transfer money.

One of the things mentioned by the Deputy is the personal impact on people, which is not just financial, there is also a mental impact. She mentioned that we do not know what their personal circumstances are. One of the other case studies in the overview that was published this week was the case of Cathal, who sent money to England for the purposes of buying a tractor. Things did not go right and neither the tractor nor the money were recoverable by Cathal. It was on foot of that loss that he then engaged in online trading with a view to recovering his losses. There is an element of people perhaps not making the wisest decisions when they are under pressure financially from other sources.

There is also the case of Pavel, who was feeling a little bit alienated from his children who were living in a different country and were reaching life stages where he wanted to give them some money. He felt a little bit under pressure and wanted to earn some money fast and, unfortunately, things did not go right for him either.

The Deputy mentioned Noah. I will also mention him because this was not a crypto-investment but was a loss of €29,000 because Noah transferred funds using an international bank account number, IBAN, which he believed to be the correct one but which, it transpired, was incorrect. Noah’s bank moved very quickly to try to recall that money and managed to get €9,000 back, but the complaint was made to our office against the bank for having failed to recover all of the moneys. I would like to highlight that case study if I could for the Deputy because it is important for consumers to understand that an IBAN is a unique identifier in accordance with the payment services regulations. There is no cross-matching process and the bank is obliged to carry out the instructions that it is given by way of the identification of that IBAN. The bank had no way of knowing that it was a fraudulent IBAN. It is very important to double-check the IBAN details because that combination of letters and digits is very critical to ensuring that the money will end up where one wants it to go. There are practices I see taking place where an IBAN is received in writing, and then there is a phone call to validate that verbally as well as in writing. That is probably a good thing, particularly if one is transferring a large amount of money.