Mr. Paul Joyce:

I thank the Chairman and the members. I will be brief. A five-page briefing note has been given to the committee. I think a discussion would be far more useful. Perhaps it would be much more interesting from the perspective of members. As Ms Blackwell has said, this report is about two things. It is about the kind of protection that exists for consumers of financial services at the point at which they draw down credit. It is also about the systems of complaint and redress that are available for people who are unhappy about the conduct of financial service providers.

The first part of the report looks at the origins of the EU consumer credit directives. It suggests that they did not really do us any favours during the boom time, in terms of curbing irresponsible lending practices. It looks at the poor transposition of those directives into Irish law. In the course of the interviews we conducted with representatives of the Central Bank, they admitted that the bank does not really police the consumer credit legislation. They prefer to police compliance with their own codes. That, of course, leads us to another problem, which is the legally binding nature - or otherwise - of Central Bank codes. It is of interest that these codes are neither primary nor secondary legislation and are not laid before the Houses of the Oireachtas. Therefore, the Members of the Oireachtas essentially have no say in how they are put together. As the committee will be aware, the code of conduct on mortgage arrears is of particular importance at the moment in the context of the alternative repayment arrangements that are supposed to be put in place to avoid home repossession.

I would like to summarise the first section of the report. We are saying we do not want another boom and bust fiasco. During the boom time, we were really missing proper regulation of credit checking and of assessment of capacity to service agreements. Interest rates were not regulated properly. We needed to have more control over sub-prime lenders. We accept that credit institutions are self-policing at the moment, but that might not always be the case. If we are to avoid a recurrence of the same situation, we need really strong rules about responsible lending and borrowing and proper information across the board for all forms of credit. We note in our submission that the hire purchase area is growing at the moment. A person is entitled to enter into a hire purchase agreement. Hire purchase companies are not regulated by the Central Bank. The consumer protection code does not apply to hire purchase. There is no obligation on a hire purchase lender to assess capacity to afford the agreement in the first place.

We looked at the operations and procedures of the Financial Services Ombudsman's bureau. We also looked at the legislation that underpins that office, which was established on a statutory basis. In the course of doing this, we interviewed a number of users of the services of the FSO - people who had made complaints, etc. We had supported some of them, through advice or otherwise. We also interviewed a number of money advisers with the Money Advice and Budgeting Service who had assisted clients with their complaints to the FSO. Given that this report runs to over 200 pages, it is very hard to summarise it to any great extent, but I would like to mention some issues that came out of the analysis of the FSO. One of the messages that came clearly across was that there is a strong inequality of arms between the consumer complainant and the responding regulated financial service provider. Those who responded to our interviews stated that this was not helped by the formality of the procedures, such as the exchange of submissions. Many people felt that they were weighed down by a welter of technical detail when all they really wanted to do was articulate their complaints and try to obtain some form of redress.

There are many statistics in the report. It is clear that many complaints disappear off the horizon with no explanation. Many settlements take place before an investigation takes place. It is clear that the Financial Services Ombudsman does not really know the reason for this and has not inquired into it to any great extent. The success rate is quite low. Just 10% of the complaints that proceed to a full investigation are fully upheld. Another 17% are partially upheld. In 2012, three out of every four complaints made that went to a full investigation ended in failure. It seems that the amount of money awarded as compensation in cases of success is on the decline. We are not against the notion of an FSO - on the contrary, it is a good idea to have a free alternative dispute resolution service - but we are seriously calling into question how well that service is performing its functions.

The report finds that there are problems with the legislation that established the Financial Services Ombudsman. We think it should be reviewed and the six-year rule should be reformed. The level of mediated cases is low. The impression we got strongly from the FSO was that the institutions are basically using that bureau as an accelerated complaints mechanism from their own complaints procedures. The aspect of this matter that probably concerns us most of all is that the avenue of appeal for a complainant who is unhappy with the outcome of his or her complaint is to the High Court. We believe this is fundamentally inaccessible and unfair. It exposes the complainant to the serious risk of legal costs. It is clear from decisions of the High Court that the appeal is not a full appeal - it is actually a review to see whether the FSO committed any serious error in coming to its decision. Many people do not understand that it is not a rehearing of all the basic facts. We are saying that the Circuit Court would be much more appropriate. We are also saying that the FSO should not necessarily be the respondent to all the appeals that take place. It appears from the 2012 figures that the vast majority of appeals to the High Court are from consumers, surprisingly. We believe the FSO could spend more time on developing the expertise of its office, rather than spending so much time defending appeals in the High Court. That is a short summary of a lengthy piece of work.