Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I am very glad the Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014 is on Report Stage and, hopefully, it will pass Final Stage in the Dáil tonight. I welcome the engagement that I and Declan O'Farrell in my office have had with the Minister of State and his officials in regard to preparing for Report Stage. A number of amendments are grouped in this section. Amendments Nos. 1 and 2, to which the Minister of State referred, demonstrate a very clear and intentional difference in terms of the definition of long-term services, and I will come back to that point. The other amendments that are grouped are amendments Nos. 7 to 9, inclusive. Amendment No. 7 is a Government amendment which does exactly what amendments Nos. 8 and 9 do and is just a differently drafted version. I understand that both versions are acceptable. However, I have no problem in accepting Government amendment No. 7 and, therefore, in withdrawing amendments Nos. 8 and 9.

Amendment No. 10 and the amendment to that amendment, amendment No. 10a, are sequencing amendments. Amendment No. 10a is crucial, in my view, because it allows for dealing with the issue of those who have been locked out of the system heretofore because of the six-year rule but who, once this legislation passes into law, can apply to the ombudsman to have their cases heard for the first time, subject to the other provisions within the legislation. I believe that is crucial and it points to the immediate impact this legislation will have. Between 2011 and 2015 some 3,003 cases were rejected by the Financial Services Ombudsman because of the six-year rule. With the lifting of this rule many, if not all, of those could potentially be resubmitted to be heard. It also ensures that those within the process will not fall out of the process. Therefore, I reiterate the need to ensure those amendments are taken.

To return to the core issue of the definition of a long-term financial service, what the Government is proposing is based on a very restricted view of what is a long-term financial service. While it is welcome that we are getting rid of the six-year rule, and I want to acknowledge the legislative work Deputy Michael McGrath has done on this previously, we have to ensure this can apply in the broadest way possible, while not being over-burdensome on insurers or financial services providers. Our amendment is tabled in a way that I believe meets that need. It ensures the service has to be of a duration of five years and one month or more. If it is cancelled or has expired more than six years previously, it falls out of the provision in terms of being able to take a case to the ombudsman after the six years.

What the Government is trying to do is limit this provision to products that are not annually renewable or not subject to unilateral cancellation by either party. In that instance, many individuals will not be able to have recourse to the Financial Services Ombudsman. I have mentioned, for example, the PPI scandal, whereby we have seen tens of millions of euro paid out. I believe there are many thousands more who have not come under the radar of the Central Bank and we are engaging constructively with the Central Bank in that regard.

There is also the situation of somebody who was simply sold house insurance a number of years ago. As people do, the customer gets the premium and, as it is an annually renewable product, under the Government's definition there would be no change to the law in regard to making a complaint. Year on year, people just pays the premium until the house burns down or is flooded. When they then check the contract they find out they were mis-sold the product. Are we to stand here knowing that these cases arise and say we are sorry but, as it is an annually renewable service, it is not a long-term service and there was only six years within which to make a complaint? Instead, what we are doing here is introducing a period of three years from the moment the person found out, or ought to have known, that the conduct arose.

The Minister of State talks about the overly burdensome nature of this change and about increased premiums. I do not believe that. While I do not doubt that insurance companies will make that claim, let us remember what is happening here. Insurance companies, whether for house insurance, PPI or car insurance, have to hold on to people's records. At this point in time, under law, up to six years after the contract has expired I or anybody else can take a claim to the Financial Services Ombudsman in regard to the product that was sold. The companies are holding to the records currently for a duration of six years after the contract. What this does is to mandate them not to delete or get rid of the documentation until six years after the product has expired. I cannot see how that would incur additional administration costs. We are not thinking about insurance companies that are shuffling boxes out to storage units on the M50. This is all being held in the cloud and the only additional costs would be in regard to cloud space. I cannot agree with the Minister of State that this would actually increase costs.

Let us remember what we are doing here. Not to have the definition I have proposed in section 2 would mean that financial services providers who wronged their customers would be able to evade the grip of the Financial Services Ombudsman and, therefore, not have to redress the wrongful action or compensate the consumer because of this type of technicality. I will be pressing amendment No. 2 and I believe Government amendment No. 1 should be rejected.

We have discussed this in and out privately. It is a policy choice. There is nothing in terms of the wording or drafting to my knowledge. It is a policy choice as to whether the Minister of State wants to limit this. My amendment does not state that all financial services are long-term financial services; indeed they are not. These services are only services that have a duration of five years and one month or more. The product has to have been sold after 2002 and if it has been cancelled or expired for more than six years, it does not come under the further sections of the Bill.

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