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

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to engage today on the Financial Services and Pensions Ombudsman (Amendment) Bill 2023. As Deputies are aware, the Government published the Financial Services and Pensions Ombudsman (Amendment) Bill 2023 on 19 December 2023. Today's Second Stage debate on the general principles of the Bill is an important step in the progress of this legislation. The Bill will ensure the Office of the Financial Services and Pensions Ombudsman, FSPO, can continue to carry out its statutory functions in line with the Constitution and will strengthen protections for financial consumers in Ireland. The FSPO was established on 1 January 2018 by the Financial Services and Pensions Ombudsman Act 2017, as amended.

The FSPO is a critical part of the consumer protection framework in Ireland, providing an independent, impartial, fair and free service that helps to resolve complaints from consumers, including small businesses and other organisations, against regulated financial service providers and pension providers. When consumers are unable to resolve a complaint or dispute with their provider, they can refer their complaint to the FSPO. The FSPO resolves complaints through one of two ways. The first is through informal mediation, helping consumers to reach an agreement with their provider, ultimately leading to a potential settlement agreed between the parties. The other way of resolving complaints is through formal investigation and adjudication, including oral hearings if required, leading to a legally binding decision which is subject only to a statutory appeal to the High Court.

The amendments proposed to the FSPO Act by the Bill before us today are a result of the ruling in the Zalewski v.Adjudication Officer and Workplace Relations Commission, Ireland and the Attorney General. In that ruling, the Supreme Court held that the exercise of powers by adjudication officers pursuant to Part 4 of the Workplace Relations Act 2015 was the administration of justice under Article 34 of the Constitution. The administration of justice, in accordance with Article 34, is normally preserved for the courts. However, the Supreme Court found that the administration of justice as carried out by the adjudication service is permissible within the meaning of Article 34 of the Constitution, as the administration of justice was limited. In light of this ruling and throughout the drafting of the Bill, the Department has held a series of consultations with relevant stakeholders, particularly the Office of the Attorney General and the FSPO. These consultations are to ensure the necessary amendments arising from the Zalewski ruling are put in place and to ensure the FSPO continues to administer justice within the meaning anticipated by Article 34 of the Constitution. This includes the possibility of holding hearings in public where deemed appropriate. The published Bill also provides for a number of improvements to the FSPO Act via targeted amendments, clarifications and corrections of typographical errors.

The detailed heads of Bill were published on 9 April 2023 and the Bill underwent pre-legislative scrutiny on 10 May last year, before publication of the Committee on Finance, Public Expenditure and Reform, and Taoiseach's report on 16 June 2023. I welcome the scrutiny report of the joint committee, which has provided a useful service to this House and highlighted important points in its recommendations. The report, in its analysis of the general scheme of the Bill, recommended changes that bring further clarity to the Bill. The pre-legislative scrutiny recommendations were carefully considered by my officials in liaison with the Office of Parliamentary Counsel in the Office of the Attorney General. I have reviewed the committee's recommendations and I can assure Deputies these recommendations have been addressed in the published Bill where it proved feasible and appropriate to do so. This includes adopting the committee recommendations on the inclusion of affirmation in addition to oath and consideration of the FSPO's interaction with the credit reviewer. I look forward to discussing these and other provisions in detail with colleagues on Committee Stage as the Bill progresses through the Houses of the Oireachtas.

I should also flag at this stage that I will be seeking to introduce one further amendment on Committee Stage. This amendment will provide the ombudsman with the discretion to identify the parties to a complaint in a decision, case study or report where a public oral hearing has been held as part of the investigation by the FSPO. It also arises from the Zalewski ruling. My officials are currently engaged with the Office of the Attorney General to finalise the drafting of this amendment.

I will now outline the main provisions of this Bill. First, I will give an overview of the main amendments being made to take account of the Zalewski ruling. I will then summarise the other amendments proposed in the Bill.

Section 13 provides that the ombudsman may require any person to attend before him and be "examined and cross-examined on oath or affirmation". This updates the principal Act to include a provision for cross-examination and provides for a person to make an affirmation in place of taking an oath.

Section 16 provides that the ombudsman is required to take a decision whether to hold oral hearings as provided for in section 12(1)(c) of the Act and as conducted, under section 47(3), in public. This decision is to be taken after consultation of the parties concerned and consideration of the nature or circumstance of the complaint or otherwise in the interest of justice. This is one of the key amendments arising as a result of the Zalewski ruling. It provides for the possibility of oral hearings in public with a view to mitigating the risk of a potential constitutional challenge to section 56(4) of the Act, which currently provides that investigations are conducted otherwise than in public. This amendment is considered appropriate, given that it was the absolute prohibition on public hearings to take evidence from witnesses at the WRC which was considered by the court to be repugnant to the Constitution in the Zalewski ruling.

Section 17 provides that mediation shall always be conducted in private. This is considered to provide important comfort to complainants who otherwise may be disinclined to submit complaints to the ombudsman. The procedures of the FSPO greatly encourage mediation between the parties on a voluntary basis so that every effort can be made to facilitate the resolution of complaints in a way that empowers the parties themselves to design and agree a confidential solution. This is in accordance with the provisions of section 58(1) of the Act which requires the ombudsman to try, as far as possible, to resolve a complaint by mediation. Mediation by its very nature is a confidential process which facilitates discussion between the parties on an off-the-record basis. Given that mediation is one of the various forms of investigation anticipated by section 12(1) of the Act, it would be contrary to the Act and the well-established procedures for conducting mediations for any FSPO investigation by way of mediation to be conducted in public. As such, an amendment to section 58 is proposed to ensure mediation shall always be conducted in private.

Section 18 outlines that a person who gives evidence on oath or affirmation that is false, and that he or she knows to be false, has committed an offence and is liable on summary conviction to a class A fine or to imprisonment for a term not exceeding three months or both.

Now that I have updated the House on the proposed amendments arising from the Zalewski ruling, I will turn to an overview of the other proposed amendments to the FSPO Act.

Section 1 is a standard provision, defining that the term "principal Act" in this amendment Bill refers to the Financial Services and Pensions Ombudsman Act 2017.

Section 2 amends the interpretation section of the principal Act. In particular, it clarifies that the FSPO has the statutory power to investigate complaints against a financial service provider or pension provider which met the definition of financial service provider or pension provider as defined in the principal Act at the time of the conduct complained of, even if said provider ceased to meet the definition of financial service provider or pension provider as defined in the principal Act before the complaint was made to the FSPO or before the FSPO's investigation of the complaint has been concluded. This section also defines the term "credit reviewer". This proposed amendment is intended to eliminate any ambiguity in the interpretation of the legislation provisions and confirm that the FSPO can investigate firms which may no longer meet the definition of a financial service provider or pension provider at the time of a complaint. This is the interpretation long since taken by the FSPO and its predecessor body, the Financial Services Ombudsman's Bureau, in the previous governing legislation from April 2005. Having considered the matter carefully, in conjunction with advice from the Office of the Attorney General, the proposed legislative amendment seeks to further provide clarity to confirm the position taken by the FSPO to date with respect to the existing statutory powers underpinning the investigation of complaints of this nature.

Section 3 outlines the methodology of calculating expenses via percentage split charged to the financial services sector, by a levy for financial services complaints and expenses charged to the Exchequer for pensions cases.

Section 6 outlines the process for appointing an acting ombudsman during an absence of the ombudsman in a number of scenarios. This includes providing a statutory basis for a member of staff to assume the position of acting ombudsman where there is no deputy ombudsman at that time.

There is a series of amendments to various sections of the Financial Services and Pensions Ombudsman Act 2017 to reflect the potential for there to be more than one person appointed as deputy ombudsman.

This point is facilitated by amendments to sections 4 and 5, and sections 7 to 11, inclusive.

Sections 12 and 14 clarify the respective remits of the FSPO and the credit reviewer. To expand on how that works in practice, the credit reviewer makes a recommendation regarding a participating bank's lending decision as a result of which the participating bank may decide to approve the loan. The FSPO's jurisdiction does not overlap because the FSPO will not interfere with the commercial discretion of a financial service provider or a recommendation of the credit reviewer. However, a consumer may make a complaint to the FSPO regarding the conduct of a bank in how it processed the application. I thank the Committee on Finance, Public Expenditure and Reform, and Taoiseach for its helpful suggestion in its pre-legislative scrutiny report relating to the drafting of the amendment on this point.

Section 14 also corrects a cross-referencing error. This amendment clarifies that the ombudsman may accept a complaint where a financial service provider or pension provider has initiated legal proceedings in relation to a complaint where the ombudsman believes, based on reasonable grounds, that the provider has initiated these proceedings in order to frustrate or delay its investigation.

Section 15 will allow the Minister for Finance to make regulations that require financial service providers, or certain classes thereof, and pension providers, or certain classes thereof, to establish internal dispute resolution procedures for dealing with complaints and to publish their internal dispute resolution procedures. Currently, there is no statutory obligation for pension providers to have internal dispute resolution processes in place. Furthermore, the regulation-making power as currently drafted would require the regulations to be applicable to all entities that meet the definition of pension provider. This amendment would allow regulations to be made that require internal dispute resolution processes to be established by those who are responsible for the management of the scheme, such as trustees, personal retirement savings accounts providers or, in the case of a public authority scheme, the Minister or Ministers to whom there is a right of appeal.

Section 19 is to correct a typographical error in section 62 of the Act, which refers to a decision of the ombudsman under sections 61 or 62 in respect of a complaint, rather than to a decision of the ombudsman under sections 60 or 61 in respect of a complaint.

Section 20 is a standard provision giving the Title of the Bill and when it will come into effect.

To summarise, the Financial Services and Pensions Ombudsman (Amendment) Bill 2023 will update the 2017 principal Act to take account of the Zalewski ruling by making targeted amendments that provide that the ombudsman is required to take a decision on whether to hold oral hearings in public; the processes around oath-taking and affirmations in oral hearings are clarified; and that mediations shall be conducted in private. This is complemented by a number of improvements to the wider Act through targeted amendments. These measures will strengthen the functions and robustness of the office of the ombudsman and improve the consumer protection framework for customers of financial services and pension providers, an aim I am sure we all share in the House. With that in mind, I look forward to engaging with Members on the Bill in the hope it can be sent forward to Committee Stage for more detailed discussion and examination, and to listen to proposals from colleagues across the House.

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