Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

On behalf of Fianna Fáil, I very much welcome the opportunity to speak on this Private Members' Bill. Fianna Fáil will be supporting its passage on Second Stage. It is a little like the buses in that one must wait a long time for one, only to have three come pretty much at the same time. We have the heads of the Government Bill, Deputy Pearse Doherty's Bill and, as he has indicated, the Fianna Fáil Bill. The latter, which focuses on the six-year rule, has been selected in the lottery to be taken in two weeks' time. Our Bill is narrower in scope than Deputy Pearse Doherty's because it predates the FLAC report, which was issued in 2014. Our Bill was published in 2013. Therefore, the scope of Deputy Pearse Doherty's Bill is wider and it deals with a number of amendments suggested as part of the FLAC report.

Along with Deputy Pearse Doherty, I commend FLAC on the work it has done, not just in this area but also in so many others. The report it has published has provided the template for badly needed reforms. While a number of other important elements have been identified in the Sinn Féin Bill, the key issue is the time limit within which complaints can be made. The current position is indefensible and many consumers of financial products are being denied justice and access to a proper complaints mechanism. That has been highlighted in so many different examples. The Central Bank's investigation into payment protection insurance policies reveals that €67 million was paid out by way of refunds and compensation to 77,000 customers. However, it could go back only so far - to 2007, I believe - because of the six-year rule. It begs the question as to how many tens of thousands of other customers who may have been mis-sold payment protection policies, whole-of-life insurance policies and endowment mortgages do not have recourse to the ombudsman. It is a source of regret that this issue was not dealt with before now. We will have to take a mature decision collectively on how to make progress on the issue legislatively. There is no point in having three Bills before the Oireachtas finance committee. That decision can be made in due course but the most important point is that the matter needs to be dealt with.

There are so many examples in respect of which it is alleged that there was serious and systematic mis-selling of products. An example is in the area of life loans, which matter I raised previously. Last year, a constituent came to me and highlighted his own quite remarkable story. He was enticed by a bank to release €68,000 of equity in his home in 2002, with a fixed rate of interest of 6.77% for a 15-year period. The amount he owed climbed rapidly. After five years, the liability was €95,000, having started out at €68,000. After ten years, it was €133,000, and after 15 years the initial loan of €68,000 had risen to €186,000. After a prolonged battle during which the bank said early repayment of the loan would involve financial penalties, it eventually agreed to start accepting repayments from the customer, who was so concerned about how the value of the loan was increasing. That customer was adamant that the escalation in the amount owed was not properly explained at all when the product was sold by the bank. This is but one example among many involving people who have not had the opportunity until now of taking a case to the Financial Services Ombudsman.

Another example concerns whole-of-life insurance policies. My colleague, Senator Ned O'Sullivan, has raised this in the Seanad on a number of occasions. Many complaints on whole-of-life insurance policies have been taken to the ombudsman. For example, there were 104 complaints in 2013, of which the ombudsman upheld 31 in full or in part. Many more cases simply never made it that far because of the deterrent of the six-year rule.

Let me give an indication of the number of cases that could have been dealt with. Approximately 1,000 complaints per year, or 12% of the annual number received by the ombudsman, fall outside the six-year period. These are the cases in which the consumer actually brings the complaint, despite not being within the six-year period. Of course, many multiples of this number do not take the issue that far because there simply is no recourse. Other examples include the various equity release products that were all the rage during the so-called Celtic tiger years.

Mis-selling is particularly difficult to prove. I refer to proving the level of engagement between the financial services provider and the consumer. The ombudsman is equipped to make these calls, carry out the investigations and arrive at a conclusion in respect of each case.

I welcome a number of the other measures in the Sinn Féin Bill, including on the definition of "consumer", the reference to the informal manner and the ombudsman acting without regard to technicality or legal form. The mediation process needs to be reformed.

The range of potential findings that are open to the ombudsman must be expanded and there are changes proposed to the appeals process. It is clear from the Minister of State's reply that the Government has considered all the issues in detail in respect of the heads of the Bill. They will be the subject of considerable discussion, debate and amendment on Committee Stage. The various parties must make a decision as to what is the most expeditious way of dealing with this issue. There is no point in clogging up the finance committee with three Bills that are essentially around the same purpose. That is for another day.

We welcome Sinn Féin's legislation and will support it. Hopefully it will not go to a vote. We welcome the Government's publication of the heads of the Bill to amalgamate the Financial Services Ombudsman and the Pensions Ombudsman and to deal with some of the issues set out in the FLAC report. Fianna Fáil is committed to doing whatever we can to ensure these changes are enacted as quickly as possible in whatever form it is done. We are open minded on the issue.

See this speech in context