Rónán Mullen (Independent)

I move amendment No. 2:

In page 60, subsection (1), to delete lines 21 to 32 and substitute the following:

"80.—(1) The liquidator of an authorized credit institution has 2 objectives as follows:

(a) Objective 1 — to work in conjunction with the Bank and the Ombudsman to facilitate—

(i) the Bank in ensuring that each eligible depositor receives the prescribed amount payable under Regulation 4 of the Regulations of 1995 from the deposit protection account, or

(ii) the Bank in transferring that amount from the deposit protection account to another authorized credit institution or to a credit institution approved by the Bank, to hold that amount on behalf of each such eligible depositor;".

Ba bhreá liom fáilte a chur roimh an Aire. Tá cuma sláintiúil air. Táimid beirt slán ón uile bhuairt agus ón uile ghalar ar maidin. I welcome the Bill as a step in the right direction in preventing a future collapse of the financial sector, such as we have seen. It is of huge importance that the country finally has a bank resolution scheme that is consistent with international standards set out by the Financial Stability Board and the Bank for International Settlements.

Despite welcoming the broad thrust of the legislation I have concerns regarding the protection of consumer rights in the liquidation process put forward by the committee. My amendments have to do with the role of the Financial Services Ombudsman as a guarantor of consumer rights. At the forefront of the resolution of financial institutions should be the protection of taxpayer interests and consumer-depositor interests, namely, the taxpayer, for two reasons. It is essential that the rights of the deposit guarantee scheme are upheld and important that the resolution process is mindful of the taxpayers' and consumer-depositors' interests in the longer term.

In the years following the onset of the financial crisis, consumers have been suffering from a double hit on their interests. Not only has taxpayers' money been used to prop up financial institutions in Ireland, but these same financial institutions have proceeded to increase bank charges and withdraw viable overdrafts. The situation cannot be allowed to arise again where ordinary consumer-depositors are to face the brunt of the consequences of collapse, which was no fault of their own. It is important that the consumer-depositor has an independent watchdog, in the form of the Financial Services Ombudsman, to guard against this terrible injustice arising again in any future resolution measure taken to protect the financial stability of the banking sector.

The equivalent legislation in the United Kingdom, the Banking Act 2009, provides for an individual to be appointed from the independent financial services compensation scheme which was created to provide a compensation fund of last resort in instances of financial crisis. It is similar to our deposit protection scheme. While I acknowledge that the operation of the deposit protection scheme is the responsibility of the Central Bank and the Financial Regulator, I feel, nonetheless, that the independence of the Financial Services Ombudsman in the process would be of considerable importance and of relief to consumers and depositors.

The role of the Financial Services Ombudsman, according to its website, is as follows:

The Financial Services Ombudsman is a statutory officer who deals independently with complaints from consumers about their individual dealings with all financial service providers that have not been resolved by the providers.

If a financial institution enters a resolution process under this Act consumer-depositors will be confused and worried about their rights and deposits. Consequently, the financial institution in question will be inundated with inquiries relating to the protection of deposits which, given the nature of the situation and strain on resources, may be difficult to respond to rapidly. As a consequence, it is possible that complaints and queries will go unresolved by the financial institution under resolution. Thus, when the resolution occurs the Financial Services Ombudsman should be central to the process to ensure that the rights of the consumer are upheld and that his or her inquiries are rapidly dealt with.

It is with this in mind that I propose this amendment to section 80 of the Bill to bring the Financial Services Ombudsman into the process. The amendment changes the wording of the section so that the liquidator of an authorised credit institution has the two objectives of working in conjunction with the bank and the ombudsman. The effect of the amendment is to bring the ombudsman into the process.

In order to ensure the fulfilment of these objectives I also propose an amendment to section 83 that as soon as practicable after the court makes a winding-up order pursuant to section 216(1) of the Act of 1963 in relation to an authorised credit institution, the bank, ombudsman and Minister shall each nominate one individual who shall comprise a liquidation committee.

These amendments are essential to protect the interests of consumers-depositors at a time when they will feel vulnerable about the safety of their money. It is vital that they know there is an independent individual advocating and upholding their rights in the resolution of a financial institution. The likelihood is that the financial institution under resolution will have its resources stretched to the limit to comply with the resolution process under the Act, so it is important that the ombudsman be kept regularly informed by the liquidator as to the progress of the resolution. By allowing the ombudsman to nominate an individual to the liquidation committee, as proposed in the second amendment, this objective of keeping the ombudsman regularly informed will be achieved. This will enable the ombudsman to keep consumers-depositors updated on the process and help to alleviate their fears that their money is under threat.

The alleviation of consumer-depositor concerns will ultimately serve to reduce the likelihood of a run on the banks and to fulfil the broader aims of the Act in upholding the financial stability of the banking sector. This is an important point. We all want to prevent the scenes that occurred in the United Kingdom after the Northern Rock debacle when worried individuals queued to withdraw money, increasing the danger of financial collapse. It is with the prevention of such a spectacle in mind that I suggest taking advantage of the United Kingdom's experience and thereby ensure the protection of consumers and depositors with an independent watchdog in the shape of the Financial Services Ombudsman.

I hope the Minister will look favourably on this proposal.