Michael Noonan (Limerick City, Fine Gael)

I thank the Deputy for raising this important issue. The issue the House is debating is whether a financial service provider which has been found by the Financial Services Ombudsman to have acted in an unfair manner should be named. This issue is the subject of discussions between the Financial Services Ombudsman and the Department of Finance.

Before I talk about these discussions I would like to talk about the important role played by the Financial Services Ombudsman. The Irish Financial Services Ombudsman's Bureau came into being in April 2005 and a measure of its great success has been its growing profile among consumers and industry. The role of the Financial Services Ombudsman is central in underpinning consumer confidence in the effectiveness of the regulatory regime, complementing the role of the Central Bank in safeguarding consumer interests. The Financial Services Ombudsman exercises an independent statutory function, operating in a strictly balanced and transparent fashion to investigate cases where individuals may have suffered as a result of, for example, misconduct by a financial institution or a failure to play fair with customers. The Financial Services Ombudsman is responsible for ensuring that unresolved complaints from customers of financial service providers are investigated, mediated and adjudicated upon. The importance of having an out-of-court adjudication complaints system for consumers who are not satisfied with the decisions of financial service providers cannot be overemphasised. Deputies should consider how difficult and expensive it would have been for the large number of consumers who have used the services of the Financial Services Ombudsman's Bureau not to have had an effective out-of-court dispute resolution mechanism to deal with their complaints. The cost of litigation might have served to dissuade many from pursuing their grievances. The costs for financial services bodies in defending complaints through the court system would also add significantly to operation costs.

I now turn to the discussions that are taking place between the Financial Services Ombudsman and my Department about the issue that is before the House. In July 2009, the then Financial Services Ombudsman wrote to the then Minister for Finance. In his letter he referred to comments made by various media personnel and other commentators at that time about the extent to which published decisions of the Financial Services Ombudsman should name the financial services provider. He went on to request he be given the option, if he considered it to be in the public interest, to name an institution that had been subject to one of his decisions. He outlined two reservations he had about naming institutions against which he had made findings. His first was that complainants may be less inclined to bring a complaint if they felt they might be named. His second was that institutions might take a more defensive line and might appeal findings more to the courts if they felt they were to be named anyway. However, despite these reservations, he said that he was requesting the option to name publicly an institution that had acted wrongly. The reason he gave for this was that it could be a preventative measure and that the threat of being named could act to ensure that malfeasance, when discovered, would be easily rectified and be less likely to recur.

The former Financial Services Ombudsman also suggested certain safeguards that should be included in any legislation that would give him this power. The first was that he be given sole discretion as to whether an institution should be named and that he would not be required to provide names in every case. The second was that the complainants would not be named. The third was that he would have statutory privilege covering the naming of institutions. He also said that criteria would have to be established to ensure the naming was done in a fair manner.

Following receipt of the letter from the Financial Services Ombudsman, my Department sought legal advice to help inform the deliberations to formulate a clear policy position. As Members will appreciate, this is a complex issue that requires detailed examination prior to bringing forward legislation. For example the criteria for publishing would have to be identified in the legislation. Any amendment to the current legislation must be validated, justified and applied in an objective and reasonable manner to all financial service providers.

My Department requested that the Financial Services Ombudsman consult with industry to better inform the debate. In 2011 the Financial Services Ombudsman invited submissions from all interested parties on the issue of publication of information on the complaints record of financial service providers. While inviting submissions, the Financial Services Ombudsman also set out its preliminary views on the form that such a disclosure could take. The Financial Services Ombudsman received a total of nine submissions, including one from an individual and eight from individual financial service providers and industry stakeholder representative groups. All submissions have been published on the Financial Services Ombudsman website.

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