Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

This issue relates to an ongoing investigation by the Central Bank of Ireland into the misselling of payment protection insurance, PPI, policies to a range of customers over a long number of years potentially. People were sold products that they were never eligible to benefit from. Categories include self-employed people, farmers and people close to retirement when the product was sold to them. Without putting a tooth in it, their money was stolen from them because they were sold products they could never possibly benefit from. I welcome the ongoing Central Bank investigation but it is moving too slowly and I will outline my reasons for saying that.

The investigation is dealing with PPI products that were sold to customers in July 2007. The firms involved who sold them their products have written to approximately 13,000 customers who were sold the products in one particular month, July 2007. If it continues to move at that pace, where they take it month by month, many of the people affected will be waiting a very long time to have any justice or recourse on this issue. It is potentially a very significant issue. Some 340,000 PPI policies were sold since 2007 so it is a very significant issue. In the UK the authorities are ahead of Ireland in resolving the issue. It will cost billions of euro, and in the UK it could potentially cost £14 billion or £15 billion, so it must be resolved.

Why does the review deal only with products sold by firms since July 2007? Are we saying there was no incidence of the misselling of PPI policies before July 2007? I do not believe that. There are two issues relevant to the Financial Services Ombudsman, FSO. One is the current six-year rule whereby a person can submit a complaint to the FSO in respect of a product sold in the last six years. If one takes the example of people who bought the product in July 2007, they have only until July of this year, two months time, to submit a complaint to the FSO. One of my concerns is that if those people do not get any satisfaction from the firm that sold them the product, the clock is ticking very quickly. Another reform we propose in that area, which the Minister is taking on board through a Central Bank Bill, is to allow the FSO to publish the complaints records of individual financial institutions.

What is the timetable for the conclusion of this investigation? It is going on since 2011. It was broadened in 2012 and now, in May 2013, the firms involved are writing to one very small group of customers who bought the product in one month, July 2007.

At that pace, people who bought the product in 2009 and 2010 will be waiting a considerable period for the investigation to be concluded.

I will leave my opening remarks at that. This is about the mis-selling of products. It is essential that the people affected get justice and a relevant form of restitution, whether through compensation, a refund of their money or the adaptation of the scheme to make it suitable for them. In addition, the firms involved which, in my view, knowingly mis-sold these products to thousands of customers should be punished and fines should be levied accordingly. This is the very type of practice that unfortunately prevailed in Ireland for far too long. It needs to be faced up to and I welcome the investigation. However, I want it to be concluded quickly and have tangible results from which people can benefit.

Alex White (Dublin South, Labour)
Link to this: Individually | In context | Oireachtas source

I thank Deputy McGrath for raising this important issue.

I have been advised by the Central Bank that it is conducting an ongoing investigation into the sale of payment protection insurance, or PPI, by firms from July 2007. In September 2012 the Central Bank broadened its investigation to include a number of other banks and credit institutions. Approximately 340,000 PPI policies have been sold by banks or credit institutions since 2007. The Central Bank issued an update on its ongoing investigation into the sales of payment protection insurance policies on 17 May 2013. Ten firms are currently undertaking reviews of their payment protection insurance sales. At the request of the Central Bank, the firms previously informed all their customers included in the PPI sales review of their intention to provide updates to them as the review progresses. The firms have commenced writing to their customers who purchased PPI in July 2007 to inform them of the outcome of the review as it relates to their situation. Approximately 13,000 customers have received letters in the last two weeks. The Central Bank is advising customers who receive a letter and who have any questions to contact their banks or credit institutions directly.

It is too early at this stage to comment on either the number of consumers who will receive refunds or the total amount to be refunded. Some firms may be able to indicate to their July 2007 customers by how much they will be restituted but the majority will not until customers have decided whether they wish to have restitution or to keep the policy subject to further suitability assessment. The Central Bank will make a statement at the conclusion of the overall process.

Throughout 2013, firms will continue to conduct the review and will directly contact all other PPI customers included in the review with the outcome of the ongoing review. The Central Bank will continue to require firms to take an orderly, co-ordinated and consistent approach to the review and will monitor progress on an ongoing basis with the firms involved and with the independent third party overseers who were appointed at the request of the Central Bank. The Central Bank's update on its ongoing investigation into the sale of payment protection insurance is available on the website www.centralbank.ie.

On the issue more generally, the Central Bank's consumer protection code is applicable to all entities regulated by the Central Bank. These regulated entities include State-supported banks and financial institutions. The code requires, among other things, that a regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market and with due skill, care and diligence in the best interests of its customers. Any breach of the code may be considered under the Central Bank's administrative sanctions procedure. In addition, as the House will be aware, the Financial Services Ombudsman was set up to adjudicate on unresolved disputes between complainants and financial service providers in an independent and impartial manner.

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for his reply, although unfortunately it is, verbatim, the reply to a parliamentary question I submitted recently. I do not blame the Minister of State for that because it is what he was provided with by the Department of Finance.

The essential issue is that of the 340,000 products sold since July 2007, the evidence is that an unknown quantum were mis-sold. There is an ongoing formal investigation and the firms involved are dealing with the products that were sold in July 2007. We are told there is an independent third party overseeing the process. However, the problem is that, under existing legislation, if people do not get the recourse they require through the Central Bank investigation, the six-year rule will exclude many of them from applying to the Financial Services Ombudsman. The Minister has stated he is open to introducing the principle of discoverability, such as exists in the United Kingdom. That means it is only from the date a person learns that a product was mis-sold that the clock starts ticking. It is important that the Government implement that reform as quickly as possible.

This issue has been highlighted on RTE's consumer programme and The Sunday Times has been running an ongoing campaign on it. It is a genuine issue and at its heart there are people who, when hard times hit them, when their businesses folded or they became ill and were no longer able to work, thought to themselves, "Well, I'm fine, because I've been paying into a payment protection policy. I'll just ring them up and they'll ensure I continue to have a reasonable standard of living." However, such people were then told by the companies concerned that even though they had been paying into the fund for a number of years they were not actually eligible for or entitled to any payment. In basic terms, that is the issue. These people deserve justice and deserve to be compensated. Small changes would ensure most of them can be accommodated and I ask the Minister of State to bring those points to the Minister for Finance.

Alex White (Dublin South, Labour)
Link to this: Individually | In context | Oireachtas source

I will certainly bring the points the Deputy raised to the Minister for Finance, Deputy Noonan. Deputy McGrath referred, correctly, to the constraints that exist from a legal point of view in regard to the bringing of claims in general, not only in this area. The statute of limitations confines the bringing of claims to particular limitation periods, as the Deputy will know. Presumably an amendment would be required for change in this area. In general, time limits on litigation make sense because they ensure that potential litigants or defendants can have some level of certainty as to their exposure. That is a general proposition. When awful cases such as these arise, however, they point us in the direction of the constraints that exist in law and it may well be that a case could be made. The Law Reform Commission has looked at this issue on a number of occasions and we also have the principle of discoverability in regard to the bringing of claims in personal injury actions, where the law has been changed to allow for it. Therefore, there may be a case. The Deputy is fully aware of this issue, as is the Minister. However, I will relate the comments of the Deputy to the Minister. This is an extremely difficult and terrible situation, faced by very many people.