Oireachtas Joint and Select Committees
Wednesday, 22 March 2017
Committee on Public Petitions
Engagement with Financial Services Ombudsman
The next item on our agenda is an engagement with the Financial Services Ombudsman. Before we begin, I remind members, witnesses and those in the Visitors Gallery to switch off their mobile phones.
I welcome Mr. Ger Deering, the Financial Services Ombudsman and Ms Elaine Cassidy, deputy Financial Services Ombudsman. I thank them for coming before the committee. The Joint Committee on Public Petitions received a petition from Mr. David Geary, entitled "Financial Ombudsman Review", petition No. P00035/16. As part of its deliberation of this petition, the committee considered a response from the Financial Services Ombudsman and agreed at its meeting of 25 January, 2017 to close the petition. However, it was further agreed to invite the Financial Services Ombudsman, Mr. Deering, to appear before the committee to discuss the three-year change programme currently in operation.
Before we commence, in accordance with procedure I am required to advise everyone here that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind our guests that their opening presentations should be of ten minute's duration or less. Members have been given a copy of the presentation that was submitted to the committee. I now invite Mr. Deering to make his opening statement.
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.
I thank Mr. Deering and Ms Cassidy for their very extensive presentation, which follows on from our previous meeting on the Citizens' Information service and MABS.
The dispute resolution team dealt with some 2,500 cases during 2016, which is a significant number. If the FSO engages with a person in dispute with a financial institution and a file is created, can the financial institution, or debt recovery people on its behalf, pursue that person? A couple of constituents of mine engaged with FSO on a technical matter pertaining to a financial service but a debt recovery agency is now pursuing them. It is exceptionally traumatic for them to have to engage the services of the financial ombudsman but the debt recovery agency is now pursuing them on behalf of the financial institution. Is that in order?
Mr. Ger Deering:
If an amount of money is owing, even if it is in dispute, it remains owing until we make a determination. However, we ask financial services providers to be reasonable while the matter is being decided. One of the benefits of the new dispute resolution process is that people can get an agreement within a month, or two or three months, and most matters are resolved very quickly. If a case has to go to adjudication it will take longer, up to another four to six months with the exchange of information and documentary evidence. It is hard to say that the financial institution is not entitled to seek to recover its money during that period but it depends on the nature of the dispute. The dispute is often not over the amount of money owing and sometimes it is unhelpful if a person does not engage. I have seen cases where somebody has stopped paying their mortgage or loan for six months or a year and that does not help anybody because, generally speaking, the money will often remain owing at the end of the process.
I will not go into the individual concerned but that is not the case. These people are engaging with the financial institution and are meeting their payments but there is a technical dispute over a number of issues. Are financial institutions adhering to the ombudsman's guideline not to pursue people when a dispute resolution process is ongoing?
Mr. Ger Deering:
This comes into play mostly in cases of mortgage arrears and in such cases we ask that there not be any court action while the process is ongoing.
Again, I come back to the fact that we are trying to resolve these matters much more quickly than in the past. The difficulty was that if there was a long-term process that involved possibly a year, a mortgage not being paid for that length of time or less money being paid could be a problem. In the main, the banks will come to an arrangement with the complainant, particularly while the MARP process is ongoing.
I thank Mr. Deering for his presentation and for coming before the committee. I want to turn to a particular group of people - those who are older - in respect of which there is widespread financial abuse. This was captured very well by a study conducted by Dr. Corina Naughton from the School Of Nursing, Midwifery and Health Systems at UCD and published in 2010. The study reported that financial abuse in Ireland affected 1.3% of the population. This translated into an estimated 6,000 cases of financial abuse within the older population, which is quite staggering. Every time, I read that statistic, I am surprised and shocked by it. We are talking about large sums of money relating to this group of individuals. Department of Social Protection expenditure accounts for 29.1% of gross Government expenditure and pension payments amount to €6.9 billion, with illness, disability and carers' payments amounting to €3.55 billion. These transfers via the Department of Social Protection alone - which would not represent all the wealth of older people - to those who may be vulnerable to financial abuse are substantial and deserving of oversight and protection. Given the widespread financial abuse of older people and adults who may be vulnerable, what protections does Mr. Deering think should be in place? What specific actions can the Financial Services Ombudsman take in respect of the scale of this kind of abuse of a wide section of the population?
Mr. Ger Deering:
One of the things we always check is whether the various codes have been implemented. The various codes from the Central Bank include how to deal with vulnerable customers. I am not saying that all elderly people are vulnerable, but some are. First, we would check to see whether the person is vulnerable and in that respect, whether the bank or financial institution dealt with them properly as a vulnerable customer. Going back to our changes, our new service suits elderly people and vulnerable customers much better than the old service. In the past, it was very much about document exchange whereas we now deal with people on the telephone. That can make access easier for many people, not just elderly people, who may find access difficult because they can now talk to somebody on the phone. I notice from the notes and messages we are getting from people that this is the kind of service they want. They want somebody to listen to them. One very interesting statistic we found from our research was that of the people who made a complaint to us who had been with larger institutions like banks and insurance companies, only 20% of them had managed to speak to somebody in that institution before they brought the complaint to us, which meant that 80% of them did not get to speak to anyone. We now get on the phone, talk and listen to people, get the financial institution on the other side, try to bring some reality to the difference and rebalance the arms between the two sides. It is the case that a financial institution is in a far better situation than an individual dealing with them. Our role is to rebalance the imbalance that exists between the resources of both parties.
Given the scale of the problem and the amount of money involved, enforcing codes is one thing and the dispute resolution service is more effective because it is more human and people get to talk to a person. Sometimes the exchange of documents does not always tell the full story. Is Mr. Deering satisfied that this is enough for the protection of people in those categories given that we know there is a very large-scale problem? Does Mr. Deering feel the measures are in place in to protect those people?
Mr. Ger Deering:
I believe they are. I should have been more explicit when I spoke about enforcing codes. We see whether the code was applied to that person and if it was not, we can either provide compensation or require the financial institution to provide compensation or redress - indeed putting them back where they were. One sees this quite a bit with insurance, where the information was not properly collected or the person taking out the insurance policy did not fully understand the questions being asked and innocently answered a question in a way where one can tell that he or she was not trying to hide anything or deceive anybody. In that situation, we would look at whether it was fair and reasonable. I refer, for example, to the attitude the insurance company took if it voided a policy. Voiding a policy can have serious implications for a person. It means he or she cannot get insurance anywhere else. In those situations, we can direct the insurance company to reinstate the policy. The answer to the Senator's question is that we have the powers to provide compensation and rectification in situations such as those.
Mr. Ger Deering:
Members will have noticed from our three-year programme that the first year was about introducing the new dispute resolution process. This year is about refining our adjudication process. Next year will be about outreach. We feel we could do more to let the kind of people referred to by the Senator know about our service but we want to get our services in order before we promote them further.
I will be bringing forward an adult safeguarding Bill in the next few weeks and financial abuse is part of that. I would not be quite as content about the measures and systems we have around people who may be vulnerable. The fact that someone is old does not mean he or she is vulnerable but abuse of people with disabilities does exist. An example would be family members collecting disability allowance and the person not getting access to his or her money. There is a slew of evidence to show that those situations exist. Obviously, if these people come in contact with the ombudsman, that is great. If they do not, how do we make sure this group is protected? If Mr. Deering has any views on what might be good measures in an adult-safeguarding context, I would be delighted to hear from him today or later. I have some other questions but, obviously, other people want to come in.
A great number of people experience financial abuse - a much greater number than we think - and that has been uncovered. It is much larger than indicated by the number of individuals who approach the FSO. This has been proven by research. A significant amount of public money is involved in those transactions, particularly things that are transferred through pensions. I am concerned that what Mr. Deering is proposing is quite reactive rather than proactive. He talked about outreach and other measures. As Financial Services Ombudsman, he wants to enhance the financial services environment for everybody. What more can be done?
Mr. Ger Deering:
It is important to draw a distinction between ourselves and the Central Bank, which is the actual regulator in this area and which can make rules across all the organisations. I know the Senator described us as reactive but we can only respond to a complaint from an individual. We do not have a regulatory role and that is how it should be because the Central Bank has that role. We can only deal with a situation where we have a complaint. That said, we can order banks, financial institutions or insurance companies to change a practice but, again, only in the context of a complaint we would have received. An important first step for us was to make our service more accessible to vulnerable people. That is probably the most important thing we can do. In terms of actual powers, as far as I am aware, the FSO has more powers than any other financial services ombudsman. We can award compensation of up to €250,000 and there is no limit on rectification, which can be extremely important. An example would be if somebody's house burned down and, after assessing the claim, the insurance company says the customer did not provide certain information when he or she took out the insurance policy.
In such a situation, if I deem that to be unreasonable, I can direct the insurance company to pay the claim, and there is no limit on the amount payable. We are anxious to retain the powers of the Financial Services Ombudsman and are happy that they will be retained in the new legislation. New legislation is required to amalgamate the two offices. There are some further proposals in the new legislation concerning an extension of the six-year time limit for the publication of findings. We welcome these proposals and think they could be very useful. If our findings could be published, people could know about our decisions and be very clear on the outcome of such a situation. We cannot yet publish our decisions but in the next week or so we will publish case studies, which will give people an understanding of the kinds of complaints we deal with and the outcomes they can expect. It is important to draw a distinction between our role as ombudsman dealing with individual complaints and the role of the regulator. Our role in that regard is to draw the attention of the Central Bank to practices with which we are not happy and with which we have difficulties, and we do so. The codes are strong if implemented.
Mr. Ger Deering:
From our point of view, it is a matter not so much of sanctions as of compensation for the individual. The Central Bank may fine people and has done so on certain occasions. That would be a matter for the Central Bank. In our case, the sanction for not implementing the code is that we can award compensation to the individual concerned, which, frankly, in such a situation, is the most important thing to the individual.
Given that we know that groups of people, as opposed to individuals, are involved, does the Financial Services Ombudsman Bureau do any thematic work whereby it overviews this and sees patterns and trends relating to particularly vulnerable groups that might be subject to abuse or poor treatment by institutions? I will finish after this question.
Mr. Ger Deering:
We do some work like that but would like to do more. We propose to develop that further in 2018. For example, regarding tracker mortgages, we prepared a report which we then gave to the Central Bank and which pointed out many of the issues that had been raised across the cases of tracker mortgages we had seen. Where we come across a systemic issue or something we believe to be systemic, we report that to the Central Bank, which is then in a position to examine it across all the institutions.
Might I suggest that the ombudsman consider this group of people for a systemic analysis? It is true that this group - older individuals and those who may be vulnerable because of their disabilities - suffer financial abuse disproportionately, and I would like the ombudsman to take that on board.
I was listening to an tUasal Deering and Ms Cassidy. The ombudsman's presentation to the committee states that the Government has decided to amalgamate the offices of the Financial Services Ombudsman and the Pensions Ombudsman. Will Mr. Deering therefore have responsibility for that entire area?
Mr. Ger Deering:
In a sense, in the context of some of the work we are doing in bringing a more informal role and the mediation role to the financial services side of things. The Pensions Ombudsman operated more in that space in any event. The amalgamation makes sense because in several areas it has not always been easy to determine whether a complaint should have gone to the Financial Services Ombudsman or the Pensions Ombudsman. Sometimes investments and pensions are very closely aligned. Yes, we will be busy, but it is a challenge we are happy to take on.
I ask Mr. Deering this because - and I am sure all Deputies and Senators hear this in their constituency offices - many people are coming under financial pressure and 50% do not seem to be aware of the ombudsman's role until one mentions it. The reason I raise this is that the vast majority of people who come to our offices to discuss financial matters are very frightened of financial institutions - and I mean that. This is why I welcome what the ombudsman does. I just wonder if we as a committee could spread even further the word around the country that the ombudsman is available to help people. We think we are getting to the root of the issue but we are not. The worst thing is to see poor families in courts being thrown around the place, and one asks why they did not go to their Teachta Dála or the ombudsman. Is there a way we could perhaps jointly spread this word around the countryside, getting into the regions and all the counties, to make sure nobody is falling through the trap and getting lost? In the cases of which I am aware, when families lose their homes, I think the effect is sometimes very bad on parents but it is really bad on children, and I do not think we ever think about this. It is a harrowing situation, as we know.
Mr. Ger Deering:
Absolutely. I am reminded of a card that arrived in our office from somebody who recently used our service. It read, "I can breathe a little easier now." It gives an indication that behind the numbers to which the Deputy has just referred, there are many personal stories of people with grave difficulty and problems. We would be very happy to get the message out. One matter we discussed with our colleagues in other ombudsman offices recently was the possibility of a clinic in Leinster House. In a previous life of mine in the National Employment Rights Authority, we provided something similar. We came into Leinster House and it was very useful to interact with Oireachtas Members because, as the Deputy pointed out, they are very often the people to whom these people with difficulties will turn. The more people here understand our role, particularly now that we have changed our processes, the more we could inform Members of that. We would be happy to co-operate with anything along those lines or any other ideas the committee may have. We accept that we need to increase our outreach; we just feel we need to do so in a phased way.
Ms Elaine Cassidy:
I will add to Mr. Deering's answer. There is one particular group that has been in the past very unlikely to come to us. I refer to those who have possibly been put off by the thinking that a consumer is an individual person. The definition of "consumer" is very wide and covers farmers and small to medium-sized businesses. Often, in these cases, the family home and the business are quite interlinked. We should not cause an awful lot more stress. It is well worth politicians' time getting out there and informing people that our services cover not only individuals, but also those groups.
I will ask two more brief questions, if I may. First, how does the ombudsman find the attitude of the financial institutions, including the credit unions? Second - that I may ask two questions together rather than taking up time - to go back to Senator Kelleher's point, I find that elderly people often come to my office to discuss online banking. It is appalling that online banking being forced down the necks of people who are elderly. Perhaps I would not use the words "financial abuse" but I would, in the case of the people to whom I refer, use the words "terrible frustration". Older people worry whether their direct debits will be paid and whether their bills will be paid on time. They have significant worries about this because it is something new and different. Does the ombudsman find this to be the case? Does he also find that some of these people have many complaints about the way in which the legal people sometimes handle their business? Can the ombudsman deal with that?
Mr. Ger Deering:
No. These matters are regulated separately by the Law Society. The complaint process for solicitors or barristers is through their own bodies. If the person ultimately has a problem with the financial service provider, we can deal with the complaint but we would not be dealing with the legal representative part of it.
Regarding the Deputy's-----
Mr. Ger Deering:
Yes, it is frustrating. I think we have all experienced the banks pushing people in the direction of online banking, yet we have also come across people who want online banking who were not given access to it. The full range of services should be available to people. They should not be forced into online banking or out of online banking or not allowed to have online banking. That is our view.
In one institution, I think it is, in a gentle manner, being forced on them. That is the problem I have. They might use very cosmetic language but the vibe one gets from it, even talking to the people working for the banks, is that they want to push people that way.
That is the problem I have with it. With the attitude of the banks and credit unions to the ombudsman's office, does it get many complaints about credit unions?
Mr. Ger Deering:
We can deal with organisations with a turnover of less than €3 million, as Ms Cassidy said earlier. We get complaints from credit unions and about credit unions. We would not have a huge number of complaints against credit unions. It comes back to the point that I made earlier, where we found in our survey that 80% of people never got to speak to anybody. The people from credit unions generally get to speak to the person.
Mr. Ger Deering:
It varies. Some credit unions are very good at dealing with their own complaints. Others are not as good, maybe because of the committee structure and such things. We find that many credit unions are good at dealing with complaints, and a smaller number are not as good.
The attitude of banks has changed very significantly in that, up to 2014 and even in 2015, the banks refused to engage in mediation in 99.9% of cases. We researched why that was the case. The kind of feedback we got was that banks had made their decision and there was no point in engaging. We pointed out that that was incorrect, because a significant number of complaints leave our office different from how they came in, which means that the bank was not quite right. I have to be fair and say that the banks and insurance companies have engaged in the process. They are seeing a benefit as well as the consumer seeing a significant benefit.
I support Deputy Murphy in what he has said. He used the word "gentle". It is a case of being gentle with a sledgehammer. The physical actions that banks have taken for the reorganisation of the floor-space of financial institutions, where they have shrunk counter-space from in excess of eight counter-spaces down to two and will shut services at 3 p.m., hurt small businesspeople as well as elderly people. They are used to dealing in a physical manner with their banks. The banks are unashamed in that. I remember being in a meeting with Mr. David Duffy in his time at AIB, five years ago, when I was still a councillor. He was open about it with regard to branch closure and also the fact that chequebooks were redundant. He said they were a thing of the past and the bank would get rid of them. They are unashamed in their manner. Small businesspeople are affected as well as elderly people. That is spinning out to the utility companies in this country, which will force customers down direct debit routes. That is having a knock-on impact on our post office services and people physically using the services in town centres. It is a bigger spectrum than just financial services and the issue of interaction. It has a wider implication for town centre usage as well. Those debates emanate from there.
I thank the witnesses for attending Their presentation gives an outline of the current powers and functions that the ombudsman's office has. I want to ask a few brief questions. My colleagues have referred to many matters.
Do the witnesses feel that the ombudsman's office needs any further powers to increase consumer protection? Is there any other regulatory body that they look at where they can see that? I welcome that they hope to publish the complaints procedures and the complaints received. I ask the witnesses to give an outline of the timeline of when complaints come in, how long it takes, and if they have any updated figures on how many complaints were received and how many were successful. The witnesses mentioned compensation. How frequently is compensation given and what amount are we looking at? Will the amalgamation of the two services have any effect on consumers? Would the ombudsman seek the strengthening of any powers following the amalgamation? My colleagues mentioned the banks. Are any banks resisting engagement with the ombudsman?
Mr. Ger Deering:
I will take Deputy Mitchell's last question first. There is a different level of engagement by different financial service providers. Some may take longer than others to come on board. If financial service providers do not come on board with the system, at the end of the day it is important to remember that we have the power of adjudication and we will make the decision. The vast majority of them have come on board reasonably well. If banks do not engage and do not come to an agreement with the complainant, ultimately we can make a finding and decide. The consumer will get an outcome from the process one way or the other.
The benefit of mediation, particularly for complainants, is the speed at which they can get it. Something like 46% of complaints were dealt with through mediation within two months and 56% were dealt with within three months. The other extreme of that is adjudication, as I mentioned. The mediation process will probably have been gone through, followed by adjudication, which will probably take four to six months, depending on how complex the issue is.
The Deputy asked how many complaints there were. Last year, 44% of complaints were either upheld or partly upheld. That would be the range of complaints that received something. That can be anything from an amount of money where somebody was denied access to a service, up to having their insurance policy reinstated. An issue that we have some concerns about is the extent to which insurance policies are sometimes cancelled, because that has serious implications for the person. We can direct the company to reinstate the insurance policy in that case. In total, last year, 1,800 people got some level of financial of financial outcome or redress through mediation and adjudication through the office.
Ms Elaine Cassidy:
On the matter of the timeline, our dispute resolution process will begin within a few days of a person putting a complaint in with us. It can be over within a week or so for simple things. It could go on for months for complex complaints like permanent health insurance and difficult insurance claims, but more due to the nature of the complaint. It goes into investigation before adjudication if that is not successful. The investigation process involves exchanging documents in line with fair procedures. We have to exchange documents. We cannot shorten that process in any way. That typically takes about four to six months, and then an adjudication will follow within the next couple of months afterwards. That is the timeline for complaints, step by step. There was also a question about powers of the ombudsman's office.
Mr. Ger Deering:
I will restate that we have significant powers. When I meet my colleagues and look at the ombudsmen in this position across Europe, I see that some are elected by industry and some are funded by a voluntary organisation which the financial service providers can opt in or out of. That is not the case here. It is a mandatory scheme. Anything regulated by the Central Bank or the Competition and Consumer Protection Commission is covered and cannot escape our remit. We can award compensation of up to €250,000, and that is quite significant. There is no limit on redress. We feel that the extension of the six year rule for long-term financial products will be beneficial. We know there are proposals to amend that in the new legislation. We feel that being able to publish our findings will also have a significant impact. We welcome those changes.
Mr. Ger Deering:
I think the amalgamation will be good for consumers. I do not think it is going to make a huge difference. Both offices provide a good service. There have been occasions where there has been confusion as to whether it is an investment product or a pension product. That will not matter now. There will be one point of entry. There is a lot of confusion. We get a lot of calls for the Public Service Ombudsman's office or for other ombudsman offices, so it is good if we can do more to streamline things. It will be better for some consumers and avoid confusion.
Ms Elaine Cassidy:
Our dispute resolution office will make contact and talk the complainant through the complaint. He or she may only have provided a very small amount of detail on the complaint form, so the office will ask questions and try to get the whole history of the complaint and understand the effect it has had on the complainant.
What is very important is that we really try to listen to people. As Mr. Deering mentioned, people have often gone through a complaints process in a bank which might have lasted months and they never got to speak to anybody. There were interactive voice systems and email but nobody ever listened to them and asked how they were affected or whether there was anything that could be done to help them. That has a huge impact.
Ms Elaine Cassidy:
We can indeed. After that phase has taken place, the dispute resolution officer will contact the bank and ask questions. He or she will also put the complainant's side to the bank, explain the impact it has had and requisition the documents required at that point. On the mediation side, officers try not to get bogged down in the paperwork because it may not be necessary. They try to push the point to the bank that these are their customers and that the right thing to do is to try to resolve the matter without getting too legal. If this mediation process is unsuccessful and we proceed to an investigation, this is where we get very heavy on documents. We send a lengthy schedule of evidence required and ask detailed questions of the provider about how it had behaved towards the particular complainant and how it deals with this type of complaint generally. We ask for recordings of all conversations with the complainant. We listen to all of them and ask the bank how it behaved under all of the aspects of the consumer codes. The file of information the bank must provide on foot of this is very hefty.
Mr. Ger Deering:
It is impeding the embedding of the two offices. In fairness, it is not impeding the work of either office, but it would be easier. In particular, we would like to get the staff working. We are in the same building, but it would be a lot easier if we had the legislation and could join up staff and make it one organisation. We would be very happy to see that happen. We know that the legislation is at an advanced stage, but it would be great to have it.
With members' agreement, we will ask the relevant Department why there is a hold up in progressing the drafting of the legislation. I am not aware that we have even received the heads of a Bill at this stage.
That is fair enough. I recall it now. Please forgive me.
We have a new development in the motor industry regarding the provision of 0% finance. The personal contract plan, PCP, is one model and there are others. I have anecdotal evidence that people have taken out a PCP product. It is so prevalent at this stage that I do not think I will offend anybody by naming the brand. The anecdotal evidence I have been hearing is that after people have paid the interest and it comes to paying back the principal, they get the shock of their lives because they never read the small print. They then realise they must pay a capital amount in financing the car. Have the delegates received complaints of this nature or have they had any interaction with the finance houses on ensuring customers of these products have absolute knowledge of what they are buying into and what the permutations will be at the end of the lifetime of these products?
Mr. Ger Deering:
I am not aware that we have yet received any complaint, but the Chairman's comment is very relevant because of the nature of these products. They are recent and it will be a year or two before we start to see the first of the problems and then complaints will be made to us. It is very important to point out that those selling these products must be registered with the Competition and Consumer Protection Commission, CCPC; as such, they fall within our remit. We can and will deal with complaints. If we start to see issues and problems arising in this regard, we will certainly go back to the industry and perhaps speak to the CCPC to see whether anything needs to be done. The CCPC is aware of the issue and we have had conversations with it about it. It has an overarching role and is very concerned and watching that space.