Michael D Higgins (Galway West, Labour)
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Question 84: To ask the Tánaiste and Minister for Finance the number of incidents and the value of overcharging of customers by banks and financial institutions each year from 2002 to 2007; his views on the ongoing revelations of such overcharging; if he is satisfied with the manner in which and speed with which repayments have been made; and if he will make a statement on the matter. [2351/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The issues raised by the Deputy fall within the remit of the Financial Regulator. The Financial Regulator's annual report for 2006 identified a total of approximately €167 million relating to overcharging issues dating from the early 1990s to the present. The most recent information available from the Financial Regulator is that 36 financial service providers and over 250 individual charging issues were involved. My Department has asked the Financial Regulator to compile updated information in the format requested by the Deputy.

This area has been a major focus of the work of the Financial Regulator since its establishment in 2003. In responding to these issues, the main priority has been to ensure that all affected customers receive full and speedy refunds and that systems and controls are put in place to deal with the issues that led to overcharging so that future errors may be eliminated or minimised. This has been reflected in the substantial progress made in the reimbursement programmes and a decline in the number of new charging issues reported to the Financial Regulator, as financial service providers have adopted a much more rigorous approach to their internal controls, IT system processes and compliance procedures.

The Financial Regulator is closely monitoring the reimbursement programmes to confirm that they are carried out fully in line with the general principles established by the Financial Regulator in 2005. These ensure that financial service providers make all reasonable efforts to make refunds, with appropriate interest, to all customers who have been affected by overcharging and that the financial institution concerned cannot benefit in any way from amounts that cannot be repaid. Details of the main reimbursement programmes are published in the Financial Regulator's annual report.

It is important to note that the high number of overcharging issues identified is largely due to system reviews and allocation of additional compliance resources by credit institutions and insurers following the establishment of the Financial Regulator in 2003 as well as the reviews initiated by the Financial Regulator and the commencement of its customer-oriented on site inspections at that time.

Additional Information not given on the floor of the House.

In addition, under the Financial Regulator's consumer protection code, which came into full effect on 1 July 2007, regulated entities must speedily, efficiently and fairly correct any charging or pricing errors and notify affected consumers of any charging or pricing errors that may have a negative impact on the cost of a service or the value of a product provided.

The whole regulatory structure for Irish financial services was reformed with the establishment of the Financial Regulator, with its statutory consumer protection mandate, in 2003. The progress made on this issue is therefore a reflection of the work of the Financial Regulator in implementing a strong principles-based supervisory approach, in fostering a compliance culture in the financial services industry and in promoting and safeguarding the interests of consumers.

Joan Burton (Dublin West, Labour)
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I wish to ask the Minister about a new area of charging under which people are being fleeced by financial institutions. A number of operators have given loans to people living in local authority estates and affordable housing, encouraging them to extend their existing mortgages to include car loans, credit card debts and other financial commitments and including some money left over to spend on, for example, a new kitchen. If a customer defaults at any level, even getting into arrears for one or two months, the financial institution will add penalties and interest charges which rise rapidly. If it takes the customer to court, astronomical legal fees are added. In cases that have come to my attention, debts of €6,000 have rapidly escalated to €20,000 to €30,000. I am told by the Financial Regulator that these institutions may not yet be regulated. Will the Minister undertake to the House to make personal investigations into these cases? They are coming before the courts in increasing numbers. It is a way of fleecing young couples who have been sold products by people who in some instances are little better than moneylenders.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will bring this matter to the attention of the Office of the Financial Regulator as the Deputy requested and consider in what way its remit can be used to deal with institutions that are not in compliance with the Consumer Credit Act and the various consumer protection codes, which apply to all resident financial institutions. Some months ago we dealt with a Bill in which these issues were taken into account and in which we tried to provide for regulatory oversight of these institutions. All I can do is undertake to bring this to the attention of the Financial Regulator. The Deputy stated that she had done so already. In my discussions I will ask the representatives of the Office of the Financial Regulator to let me know the extent of the problem and possible remedies.

Arthur Morgan (Louth, Sinn Fein)
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Given the regularity of these indiscretions by banks and financial institutions, will the Minister consider giving the Financial Regulator the option of applying a fixed penalty to the various institutions at its discretion? For example, overcharging of up to €500 would attract a penalty of €500 multiplied by a certain amount, resulting in a sliding-scale penalty system. Has the Minister considered such a system?

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Financial Regulator has various powers which involve reimbursement and ensuring that these issues do not recur. In addition, if anything beyond the civil code has taken place, information will be passed on to the Garda and the fraud squad for follow-on investigation. We have in place a Financial Services Ombudsman who has proven effective in individual cases in which he used his statutory powers to ensure that people are dealt with fairly. Where there have been transgressions by financial institutions against individual clients, effective remedies are available under existing legislation.

Richard Bruton (Dublin North Central, Fine Gael)
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The Minister will recall that the Financial Ombudsman made a ruling in respect of overcharging by a financial institution, but it was found that under the legislation he was not empowered to make a class award which would allow others affected by the same problem to receive an award. I understand from a previous reply to a parliamentary question that the Minister is considering extending to the ombudsman the power to give class recommendations of that nature. Has the Minister reached a decision on whether to give him this power?

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have not yet reached a decision. Part of my consideration will be to discuss this personally with the ombudsman to find out his views on what should be done.