Timmy Dooley (Clare, Fianna Fail)

I welcome the opportunity to contribute to the Second Stage debate on this Bill. I compliment my colleague, Fianna Fáil spokesperson on finance, Deputy Michael McGrath, for his work on the Bill.

The Financial Services Ombudsman performs a worthwhile function in the overall architecture of our financial regulatory system, one which has been tested and challenged in a significant way in recent months and years. The work done by the Financial Services Ombudsman's office since its inception has been exemplary. Deputy McGrath is correct that we are fortunate the incumbent financial services ombudsman is someone of the calibre of Mr. William Prasifka who has considerable experience of the public sector in Ireland and a reputation overseas. It would be remiss of me not to acknowledge the work of former financial services ombudsman, Mr. Joe Meade, a county colleague, in establishing the Office of the Financial Services Ombudsman and for the calm and cool manner with which he dealt with complainants and the financial sector at a time of light touch regulation, which is now synonymous with the crisis in which we find ourselves. While this posed a particular difficulty for Mr. Meade he nonetheless went about his business in a fair and calm way. Despite the fact that at that time it was not popular to challenge the decisions of the financial services industry and that the financial services sector was viewed as a growth area in terms of job creation he never allowed himself to be bullied. Mr. Meade showed what public service is about and we owe him and the current ombudsman a considerable debt of gratitude.

As stated by Deputy McGrath, the impact of this Bill will be to further strengthen the regulatory process. If implemented, it will act as a deterrent to misselling, which sadly was partly how financial institutions conducted their business in the past. It is regrettable that the paper stocks of a company were more relevant than anything else to the manner in which companies' managed their business and that the performance of front line staff in banks was rated on the amount of secondary products which they sold over the counter rather than on assessment of money lending risk or encouraging people to deposit money. We now know this type of culture developed around financial services to the domestic market. It is for this reason it is unfortunate the regulator did not have the type of capacity provided for in this Bill. As stated by Deputy McGrath the better known financial institutions spend a great deal of money enhancing and developing their brands. The last thing they would ever have wanted was to have an adverse finding against them by the ombudsman publicised. We must all take responsibility for what happened.

It is hoped that the Minister will take a non-partisan approach - as I know he does on many issues - to this Bill and will implement it as quickly as possible to give the current financial services ombudsman the discretion to use the powers provided therein. I do not suggest that on all occasions the name of an institution against whom a negative find has been determined would be publicised. It would be necessary to weigh up doing so against the evidence of malpractice or misselling. We all have the potential to make mistakes. For this reason, it should be open to the ombudsman to exercise his-her discretion in this regard. There is a need to deal now with this culture which was pervasive in the financial services sector.

Deputy McGrath has outlined the different sectors involved, including the banking, investment and insurance sectors. It is hoped that if and when this legislation is passed we will not be reviewing the same type of cases which sadly we have all heard about. I would like to mention a couple of cases which came to my attention. The first relates to clients not being informed of how an investment works. A couple in their 70s had deposited their life savings of €345,000 in a bank and were encouraged in 2005 to put their money in a managed fund to get a better return. In 2008, they were approached by the bank again and were told that there had been a significant drop in the value of the fund. It was only at this point they were fully informed of how the investment was managed, in particular that 70% of the investment was based on the performance of the stock market. To make matters worse, they were told that if they withdrew their money at that stage they would be hit by €9,000 penalty. Thankfully, the ombudsman found in their favour.

A second case involved a woman in her 50s who held a critical illness policy with an insurance company and submitted a claim for benefit arising from her loss of sight. The company declined the claim on the basis that the complainant did not meet the criteria set out in the policy of total permanent and irreversible loss of all vision in both eyes. The complainant had suffered for many years with a rare debilitating disease categorised by the fragmentation of the elastic fibres in the skin and membranes of the eyes. The particular disease from which the complainant suffered was not covered by the policy. However, the complainant sought to qualify under the heading of "blindness". The ombudsman noted that in considering the complainant's claim her ophthalmic surgeon had been required to complete an assessment and had been specifically asked whether the complainant had permanently and irreversibly lost sight in both eyes and when this had occurred. The surgeon confirmed that visual acuity had dropped to the level outlined by September 2004. He also confirmed that there was no prospect of vision improvement by way of surgery. In those circumstances, the ombudsman took the view that it was inappropriate for the company to have refused the complainant's claim on the basis that she did not meet the criteria set down in the policy. In circumstances where the policy document contained no reference to the exclusion of claims for benefit where peripheral vision was noted to exist the ombudsman took the view that the opinion of the surgeon in October 2006 that the complainant had permanently and irreversibly lost sight in both eyes was sufficiently clear in respect of the position and the company ought to have admitted the complainant's claim at that juncture. The ombudsman upheld the complainant's grievance and directed payment of the lumpsum benefit of €25,000 pursuant to the critical illness policy.

It is right and appropriate that the financial services ombudsman could tease through in detail the background, terms and conditions of the investment and the insurance policy and to make a fair and balanced judgment on behalf of the individuals concerned. Clearly, some institutions will try to find exclusionary measures or opt-outs in the hope of their never having to meet an individual's needs. This further illustrates the considerable work of the ombudsman.

I urge the Minister to give due consideration to the request by my colleague, Deputy Michael McGrath, myself and others to accept the Bill in a non-partisan way, thus acceding to the demands of the current ombudsman in providing him with these additional powers, to be used in a sparing way. I acknowledge that many good products are sold by financial institutions, ones which meet consumers' needs and in respect of which there is no culture of misselling or a failure to tell the whole truth. Also, there are fine people working in our financial services sector. When we deal with those who mis-sell, it is right for us to recognise that some really good people are suffering on a daily basis because of the actions of a few people at senior levels of their institutions. It is fitting that we should pay appropriate respect to the work that is being done by the individuals in question, many of whom feel demoralised at present.

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