Arthur Spring (Kerry North-West Limerick, Labour)

I wish to acknowledge Deputy Michael McGrath's constructive legislation and that the Minister for Finance has welcomed it and accepted it which will be to the benefit of the Financial Services Ombudsman.

This Bill will make provisions to empower the Financial Services Ombudsman to report on investigations and adjudications of regulated financial services providers arising from consumer complaints made about the conduct of regulated financial services providers. I hope the legislation will be enacted in the spirit Deputy Michael McGrath spoke of earlier. It will allow the ombudsman to publish and report on the complaints made to his office about the conduct of regulated financial services providers and the investigation and adjudication by his office of complaints made to it about the conduct of regulated financial services providers. This will now serve as a deterrent to financial services providers to act in a manner that contravenes the Bill.

The Central Bank of Ireland was restructured and renamed as the Central Bank and Financial Services Authority of Ireland on 1 May 2003. Under the Act, the supervision of all financial institutions operating in Ireland was consolidated under an autonomous body - the Irish Financial Services Regulatory Authority - which was established within the Central Bank. Apart from this change, which relates to financial supervision duties, all other functions of the Central Bank remain unchanged, including monetary policy, being banker to the Government, etc. The Act brought together in a single location the supervision of the major sectors of the financial services industry including insurance, undertakings as well as the supervision of banks and the funds industry. It stressed the supervisory structure on consumer interests.

There are many perceived benefits from the 2003 Act despite all the financial turmoil in recent times. Ireland is still seen as an attractive and soundly regulated location for the financial services industry. This allows for the increasingly complex and interrelated sectors of the financial services industry to be regulated on a co-ordinated and integrated basis. It also allows for the continued close co-ordination of financial services regulation and overall monetary and financial stability policies in the public interest. It will also ensure the ongoing interchange of ideas and personnel between operational, monetary and regulatory functions within the Central Bank and Financial Services Authority of Ireland while establishing a position of registrar of credit unions within the overall structure. The registrar will act as the principal regulator of the credit union system, a role currently held by the registrar of friendly societies, subject as appropriate to guidelines from the Irish Financial Services Regulatory Authority board.

The McDowell report of 1999 stated it was felt in the late 1990s as part of the overall enhanced regulatory framework for the financial services sector, including the establishment of the Financial Regulator, that a statutory ombudsman scheme for all providers of financial services with statutory powers was necessary. This is now the position and is enshrined in section 16 and Schedules 6 and 7 of the Central Bank and Financial Services Authority of Ireland Act 2004. The Financial Services Ombudsman is a statutory officer who deals independently with complaints from consumers about their individual dealings with all financial services providers that have not been resolved by the providers. The ombudsman should be entitled to publish the findings from his investigations.

The ombudsman is often made aware of a problem when a complaint is made to his office. However, on many occasions customers go first to their bank to point out where interest rates have been applied incorrectly and so forth. Several cases have been taken against AIB, Bank of Ireland and EBS but many of these have not got into the public domain or were brought to the ombudsman's attention. If a customer makes a complaint against a financial services provider about an internal mistake, the provider should be compelled to highlight it to the ombudsman.

It is in the interest of the consumer and the financial institutions themselves that consumer issues and the relevant findings which are investigated by the ombudsman are published and brought to public attention. The fact that details of the identity of the financial services provider that was investigated and adjudicated upon will be made public will force the financial institutions to be more meticulous in their charging policies and procedures. I welcome the proposed changes to the current legislation.

The Central Bank and the Financial Regulator have become increasingly important. When the euro was introduced, the Central Bank did not quite understand its role and may have taken its eye off the ball. The Financial Regulator certainly took his eye off the ball. Loan-to-deposits ratios, income-cost ratios, sources of capital, etc. were not regulated in a prudent manner. I believe the European Central Bank, like any good central bank, should have a far greater role. While the stability treaty will mean we need to have more control over our spending and gross domestic product ratios, it will also mean banks need to be governed responsibly and cannot bring down a country.

Banks should be reprimanded for wrongdoing through Central Bank legislation. The Financial Regulator needs to be prudent at all times while the Financial Services Ombudsman has a role to play in this also. The idea that a bank can do something wrong without that being highlighted to the ombudsman is wrong. I will supply the Minister's officials with documentation tonight so that he and they might consider legislation to ensure that, if a complaint is made to the bank, the bank or any other institution licensed by the State must tell the ombudsman that it made a mistake. By highlighting situations such as this, we can clean up the banks' acts once and for all.

I thank Fianna Fáil for its Bill. That the non-Government parties are bringing something to the table that is to the betterment of society is welcome.

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