Friday, 14 July 2017
Financial Services and Pensions Ombudsman Bill 2017: Report and Final Stages
I move amendment No. 2:
In page 22, to delete lines 2 to 33 and substitute the following:“18. (1) In this section, “regulatory authorities” means the Bank, the Competition and Consumer Protection Commission and the Pensions Authority.
(2) The Council and the Ombudsman shall co-operate with the regulatory authorities with a view to ensuring that this Act operates in a way that contributes to promoting the best interests of consumers and actual or potential beneficiaries of financial or pension services and to the efficient and effective handling of complaints.
(3) Notwithstanding anything contained in any enactment, for the purposes of the performance of the functions of the Ombudsman under this Act, information held by the Ombudsman may be transferred by the Ombudsman to the regulatory authorities.
(4) The Ombudsman may, or shall whenever requested in writing to do so by a regulatory authority provide that regulatory authority with records or copies of records, or information, dealing with specified matters, or matters of a specified kind, relevant to the performance of the functions of the regulatory authority.
(5) The Council or the Ombudsman may make recommendations to the regulatory authorities in relation to measures that those bodies might take in order to—(a) effectively deal with persistent patterns of complaints made against—(6) A person who discloses information under or for the purposes of this section does not incur liability for defamation or other civil liability only because of the disclosure.(i) specified financial service providers,(b) improve the way in which financial service providers or pension providers deal with complaints that are made against them, or
(ii) a specified class of financial service providers,
(iii) specified pension providers, or
(iv) a specified class of pension providers,
(c) effectively deal with any other matter relating to promoting the interests of consumers and actual or potential beneficiaries of financial services or pensions.
(7) Nothing in this section affects an obligation or power to provide information in any other enactment.
(8) Without prejudice to section 33AK of the Act of 1942, at the request of the Ombudsman, the Bank may validate any information provided to it by the Ombudsman under this section that is used to calculate the financial services industry levy in so far as such data to validate that information is available to the Bank.
(9) The Ombudsman and a regulatory authority may enter into a memorandum of understanding setting out the terms under which they agree to give effect to any of the matters mentioned in subsections (2), (4) and (5)(a) to (c).”.
Section 18 allows for the transfer of information between the ombudsman and the Pensions Authority and the Central Bank of Ireland. This includes enabling the ombudsman and the bank to enter into a memorandum of understanding. Section 77 provides for co-operation, as well as the exchange of information, between the ombudsman and the regulatory bodies of the Central Bank of Ireland, the Registrar of Credit Unions, the Competition and Consumer Protection Commission and the Pensions Authority. There is substantial overlap between the sections. Specifically, they both contain provisions facilitating requests for information from the ombudsman by certain regulatory authorities and granting the ombudsman the power to make recommendations to those authorities. In light of this overlap it is proposed to merge section 77 with section 18. This merger will avoid needless duplication within these sections and increase the cogency of the Bill.
The first drafting change as a result of amendment No. 1 is the inclusion of new subsections (1) and (2) into section 18. These subsections essentially transpose subsections (1) and (2) of section 77. The new subsection (1) defines regulatory authorities as the Central Bank, the Competition and Consumer Protection Commission and the Pensions Authority. These are the bodies with which it is proposed the ombudsman may share information under this section. The inclusion of the Competition and Consumer Protection Commission as a regulatory authority is necessary because it authorises credit intermediaries who provide financial products such as hire purchase agreements and deals with any complaints regarding the advertising of such products. The Registrar of Credit Unions is no longer included as a regulatory authority because credit unions are regulated by the Central Bank and it is, therefore, already included.
The new section 18(2) mirrors a similar existing provision from section 57CQ(1) of the Central Bank Act 1942, which currently governs the co-operation between the council and the Financial Services Ombudsman with the Central Bank. This subsection was in section 77(2) but, from a drafting perspective, we have decided to merge the two sections to eliminate duplication.
Amendment No. 1 also updates subsections (3), (4), (5) and (9) by providing that individual references to either the Central Bank, the Registrar of Credit Unions or the Pensions Authority be replaced by a reference to the "regulatory authorities". As the ombudsman's duty to co-operate and its ability to make recommendations extends to bodies beyond the Central Bank and the Pensions Authority, it is necessary that he or she be able to provide information to all the defined regulatory authorities under the scope of this section.
Section 18(3) allowing information to be transferred despite any other enactments was previously section 18(1) in the Bill as published. Section 18(4), relating to requests for records, was previously section 18(2). Section 18(5) was previously section 18(3) and is further updated by including the "Council" as a body that is able to make recommendations to certain regulatory authorities regarding specified matters, in addition to the ombudsman. This brings this section into line with the text of the equivalent provision in the existing legislation, section 57CQ(2) of the Central Bank Act 1942. The inclusion of the council is also consistent with its review and advisory functions as contained in section 40 of the Bill.
Section 18(6) is a repeat of the original section 18(4), a standard clause which provides that the discloser does not incur liability for defamation.
Section 18(7) is a repeat of the original section 18(5) providing that nothing in this section affects an obligation to provide information in any other enactment.
Section 18(8) is a repeat of the original section 18(6) where the bank may validate information regarding the calculation of the industry levy. The final drafting change made by amendment No. 1 is to expand the scope of the topics covered by memorandums of understanding between the Ombudsman and the regulatory authorities to all matters contained in subsections (2), (4) and (5)(a) to (c). In other words, the authorities' memorandum of understanding can cover matters relating to promoting the best interests of consumers, the provision of records or information, or recommendations regarding persistent patterns of complaint. This change to section (9) ensures consistency with the existing rules regarding such memorandums of understanding, as currently contained in section 57CQ(3) of the Central Bank Act 1942.
As a consequence of the changes proposed to be made to section 18 by amendment No. 2, the provisions contained within section 77 have become redundant. Therefore, amendment No. 16 necessarily removes the entirety of section 77 from the Bill as it is now replicated in section 18.
I am sure the Minister is not confusing us intentionally but I am certainly confused, having listened to his contribution. My understanding was that we were discussing only amendments Nos. 2 and 16 and that amendment No. 1, to which the Minister of State also referred, had been withdrawn.
I believe the slight confusion arises from the fact that this is the first Government amendment as amendment No. 1 is in my name. The Minister of State discussed amendment No. 2 and a consequential amendment, No. 16, which is a technical amendment.
I welcome amendment No. 2, which replaces many of the provisions of various Acts and strengthens the level of co-operation between the Ombudsman, the Financial Services Ombudsman Council, the Central Bank of Ireland and the Competition and Consumer Protection Commission. For some time, there has been confusion as to where responsibility for consumer protection lies. For example, protection in respect of car insurance lies with the Central Bank as opposed to the Competition and Consumer Protection Commission, although the Office of the Ombudsman also has a role in this area. The proposed measure strengthens co-operation between the various bodies in respect of information exchange. However, we must do much more in this area and provide for clear lines in respect of who is responsible for what as well as ensuring there is no passing of the buck. These provisions are a welcome step in ensuring recommendations can be made and information exchanged between the relevant bodies. I hope the bodies in question will do this vigorously for the benefit of consumers.
The Fianna Fáil Party supports the amendment. On a more general issue, is it the Government's objective to have all Stages passed in the Seanad next week and have the Bill enacted within one or two weeks? Is that the overall plan for having these key reforms introduced?
I move amendment No. 3:
In page 26, line 29, to delete “substantiated or partly substantiated” and substitute “upheld, substantially upheld or partially upheld”.
I will discuss amendment No. 3 with amendments Nos. 4, 6 and 11 to 15, inclusive, as they all relate to updating the categories of decision the Ombudsman can make in relation to complaints received and investigated by him or her. The provisions in this area have been improved and we are satisfied that the terminology used in previous legislation introduced by Deputy Pearse Doherty is correct.
In the existing legislation set out in the Central Bank Act 1942 and in section 60 of the Bill, the Ombudsman must make a decision in writing on completing an investigation that the complaint is substantiated, not substantiated or partly substantiated. Following recommendations from FLAC's 2014 report, Redressing the Imbalance, the categories of decisions that the Ombudsman can make, as originally set out in 57C1 of the Central Bank Act 1942, have been revisited. Sinn Féin changed the categories of decisions in its Private Members' Bill to make the outcomes more transparent to consumers and less misleading. Previously, as far as I understand, consumers may have been told their complaint was partly substantiated when in actual fact it had been mostly rejected by the Ombudsman. It is argued that this may have given a misleading impression of success rates. I thank Deputy Pearse Doherty for his work and research in this area and his recent decision to revise the third category of decision from substantially rejected to partially upheld, as we discussed on Committee Stage on 29 June. As I said during that debate, I am happy to now align the categories of decisions in the Government Bill with the revised categories in Sinn Féin's Bill. It is important to maintain as much consistency as possible across the two Bills where they overlap.
If my amendments in this group are accepted, the following will be the categories of findings made by the Ombudsman in future: upheld; substantially upheld; partially upheld; and rejected. Amendment No. 11 proposes to update the categories in section 60 to these four categories. Sinn Féin submitted amendment No. 2, which is similar to my amendments Nos. 11 and 13. Amendments Nos. 13 and 14 follow on from amendment No. 11, changing the references in section 60 from the old categories of "substantiated or partly substantiated" to "upheld, substantially upheld or partially upheld".
Section 60 deals with complaints and redress in respect of financial service providers. Section 60(2) sets out the grounds for reaching certain decisions and updates a complaint found to be "substantiated or partly substantiated" by substituting the term "upheld, substantially upheld or partially upheld".
Section 60(4) sets out the redress available when complaints are upheld. The terms would, in future, read "upheld, substantially upheld or partially upheld". The rest of the amendments in this group are consequential changes as follows. The proposed amendments No. 3, 4 and 6 seek to update section 25 to delete the reference to decisions that are "substantiated or partly substantiated" and substitute "upheld, substantially upheld or partially upheld".
Section 25(6) deals with the "name and shame" provision. If, in the preceding year, three complaints about a regulated financial services provider are made to the Financial Services Ombudsman and the Ombudsman finds them to be upheld in some manner, such providers will be named publicly by the Ombudsman.
Section 25(11) sets out the procedure when a party appeals a decision, updating the text to contain the new categories of "upheld, substantially upheld or partially upheld" decisions.
Amendment No. 15 updates section 72. Section 72(2) concerns the power of the court to grant injunctions in cases were the Ombudsman made a decision. It also proposes to delete the words "wholly or partly substantiated" and substitute the words "upheld, substantially upheld or partially upheld".
The Minister for Finance was also concerned about providing more transparency for consumers on decisions. Section 62 includes a provision for the publication of the Ombudsman's financial services decisions with names redacted, which is maximum transparency in any case.
I support the amendments. I submitted identical amendments to amendments Nos. 3, 4, 6 and 13 to 15, inclusive. I assume the reason the amendments are in the Minister's name is that the wording is identical. They are identical because they replicate the provisions of the Bill recently passed in the Seanad. With two Bills proceeding through the Houses at the same time, it is crucial that the terminology used is identical, especially given the uncertainty about whether the Bill before us will be passed in the Seanad before the summer recess.
I welcome the amendments.
They introduce a new finding, as the Minister of State has said, of "partially upheld". I am pleased the Minister of State has adopted the proposal put forward by Sinn Féin on widening the number of findings that could be made. The amendment is about changing the text from "substantially rejected" to "partially upheld", which is a more positive way of reflecting the decision by the ombudsman.
The amendments also capture the issue of the name-and-shame provision that is already in place. These amendments allow for a third group of findings on the ground for naming and shaming to be dealt with. This will help consumers to make sense of the provisions because the findings are more accurately described as "partially upheld". This will reflect cases where the financial service provider was in some way at fault, however minor. Now, with four different categories, that will be far clearer.
The Minister of State referenced amendment No. 12, which is in my name. It is identical to amendments Nos. 11 and 13 combined, which are both amendments of the Minister of State. I put the two amendments into one but otherwise it is word-for-word identical. I will withdraw amendment No. 12 and allow the Minister of State to bring through amendments Nos. 11 and 13. It makes no difference which of them goes forward.
I wish to speak in support of this group of amendments. The range of findings that will now be available to the ombudsman's office represents a positive development. Some of the issues are nuanced but I believe it is progressive. It is critical that we avoid any mismatch, as I indicated earlier in the course of this Bill, between the Government legislation and the Sinn Féin legislation. They have to mirror each other exactly. I am unsure which will be signed into law first. As I understand it, if the Sinn Féin legislation is signed into law first and subsequently the Government legislation becomes law, then Government Act revokes the Sinn Féin Act. The Minister of State might clarify that point. It is important that they mirror each other on the range of options now open to the office. That is my understanding of what is proposed and we support it.
I move amendment No. 8:
In page 30, between lines 19 and 20, to insert the following:“(6) The Minister may from time to time advance to the Ombudsman, out of moneys provided by the Oireachtas, such sums as the Minister may determine for the purposes of the performance of the functions relating to superannuation conferred on the Financial Services Ombudsman Council by the Act of 1942.”.
The current legislation, which is the Central Bank (Supervision and Enforcement) Act 2013, includes a provision in Part 1 of Schedule 2 that contains the text of the proposed amendment. The text was not transposed into the Government Bill in error. The proposed amendment seeks to address this gap. It is a technical amendment to restore the position to that which currently exists.
There are separate existing superannuation schemes, one covering the Ombudsman and deputy Ombudsman and another covering the staff of the Financial Services Ombudsman Bureau. The administration of these schemes comes under the aegis of the council at present and will pass to the ombudsman under the amalgamation. The intention is that surplus funds in these schemes will be paid into the Exchequer with a view to these funds being returned when they are needed to pay superannuation benefits. However, section 3(2)(b) only permits the Minister to make payments in respect of complaints regarding pension providers. This additional enabling provision is required to allow the Minister to make these payments in respect of the superannuation schemes.
I move amendment No. 9:
In page 46, lines 10 and 11, to delete all words from and including “(1) The” in line 10 down to and including line 11 and substitute the following:“(1) The Ombudsman shall, as part of an investigation, try, as far as possible, to resolve a complaint by mediation.”.
Deputy Doherty and I have submitted similar amendments on the topic of mediation. The merits of mediation as a form of dispute resolution have been discussed numerous times during the passage of this Bill and Deputy Doherty's Bill through the Houses.
Mediation is a process whereby the parties to the complaint try to reach a solution through agreement with the assistance and support of a mediator rather than through an immediate investigation of the complaint and a decision from the ombudsman on the complaint.
If it works well, it should be a less onerous, faster and more amicable means of reaching an outcome for both parties. Not long ago, the cases that were resolved by mediation in the Financial Services Ombudsman Bureau were at a level below 1%. Following a strategic review and re-organisation of the office, I understand that the number of cases resolved via mediation is now close to 60%. I am keen to encourage such improvements in the levels of mediation. For this reason, and for the avoidance of any doubt about the support for mediation as a conflict resolution tool, I am reverting to the original text on mediation in the existing legislation, which obliges the ombudsman to try to resolve a complaint by mediation as far as possible. The previous text in the Government Bill, as passed by Committee, stated that the ombudsman "may" try to resolve a complaint by mediation in circumstances where he deems it appropriate. I prefer the drafting of my amendment as it fits neatly with the other provisions.
Section 12 refers to possible resolution of complaints by informal means, which may happen immediately on receipt of a complaint. Therefore, I prefer the wording in amendment No. 9 rather than the wording in Deputy Doherty's amendment No. 10.
I thank the Minister of State. We had a discussion on this matter on Committee Stage. I took the view that the mediation section that the Government has put forward is welcome. I echo what the Minister of State has said in terms of welcoming the positive results that we are seeing from the Financial Services Ombudsman Bureau in terms of the use of mediation. It is a voluntary process.
The change in subsection (1) that would have removed "shall" and replaced it with "may" could have been used by some financial institutions as a way of trying to avoid mediation. That was the reason for some concern. We tabled an amendment, but we are happy to accept the Government drafting. It is identical in function, but the drafting, as the Minister of State pointed out, fits more neatly with his legislation.
For full information, amendment No. 9 has exactly the same text that appears in the Seanad Bill, which is the Sinn Féin Private Members’ Bill. On that basis, we will not proceed with amendment No. 10.
I welcome the amendment. We all accept that, where possible, it is preferable for disputes to be resolved by mediation. We should bear in mind that all of the cases that go before the ombudsman's office have already been the subject of an internal complaints procedure within the financial institution concerned and it has not been possible to resolve the issue. Where possible, mediation should be given every opportunity to work. It is the most desirable outcome, but it is not going to be possible in all cases and the full powers of the ombudsman will have to be deployed to resolve those issues.
I move amendment No. 11:
In page 47, to delete lines 37 and 38, and in page 48, to delete line 1 and substitute the following:“(a) is upheld,
(b) is substantially upheld,
(c) is partially upheld, or
(d) is rejected.”.
I thank everyone involved. There has been good progress. This Bill dovetails well with the Sinn Féin Bill. Each aspect and discussion has improved the legislation on each occasion. I thank all Deputies involved. I thank the staff in the Department of Finance. I thank everyone present for their co-operation in the matter.
I thank the Government for co-operating with me during the passage of the legislation. My Private Member's Bill has provided an impetus and put a bit of energy behind the Government pursuing this legislation. At its core, the legislation is about the merger of two offices, the Ombudsman's office and the Pensions Ombudsman's office. Crucially for the consumer, the measures in the Sinn Féin Private Member's Bill are replicated in full in this legislation. It will give greater consumer protection to those who have been locked out of the system as a result of the six-year rule. When we pass my legislation in a couple of minutes, thousands of people will be able to access justice as a result. If this legislation passes all Stages of the Seanad, I will be happy that when it repeals the provisions in my Bill, it will insert the provisions into this. I am glad of that and thank the Government for its support. It is important to say that the core element in this Bill is the six-year rule. Not only is it contained in my Private Member's Bill but Deputy McGrath had a similar Bill on it. It is something on which there is cross-party support and it is crucial we have it through before the end of this term.
On behalf of Fianna Fáil, I welcome the passage of this legislation. From our point of view, the key issue from a consumer perspective is the six-year rule. The reality is many consumers have been denied recourse to the Ombudsman because of the constraints imposed by that six-year rule. It is a vital reform and I hope this or the Sinn Féin legislation can be enacted without further delay.