Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank all Senators for their good wishes. Senator Ó Clochartaigh is the only Member present with whom I served in the former Seanad. I got on very well with him and really enjoyed my time in this House.

The Government accepts the bona fides of the Bill. Our objective is to ensure that we put an appropriate Bill in place and the reason we do not want it going through all Stages is that we think it may be improved. If we can improve it, we will, because, in all likelihood, this could end up in court and the Judiciary, which are separate from the Legislature, could determine something other than what the Oireachtas determines. That can happen. We do not want it to happen. I want to ensure that we have the best possible legislation by the time we are finished.

I welcome Deputy Pearse Doherty to the Seanad. I worked well with him on the banking inquiry for two years along with my colleague, Senator Kieran O'Donnell. We are not shy in trying to put legislation in place to ensure that consumers are protected. Deputy Doherty's Bill proposes to extend the time limits within which consumers can complain to the Financial Services Ombudsman about the conduct of financial service providers and to improve the consumer complaints procedure more generally. It is commendable that Deputy Doherty is motivated to improve the consumer protection framework in Ireland and there has been a productive debate on the provisions of this Bill as passed by Dáil Éireann.

As Members are aware, the Government also has a Bill dealing with issues in this area, namely the Financial Services and Pensions Ombudsman Bill 2017 which has also been progressing through the Houses of the Oireachtas. The Government's Bill is more comprehensive as it deals with the amalgamation of the Financial Services Ombudsman and the Pensions Ombudsman, strengthens the procedures for consumer complaints in regard to these products and updates and modernises the two pieces of original legislation underpinning the two bodies. I support the intention behind the Sinn Féin Private Members' Bill as its principles and ethos are mostly aligned with the Government Bill. There have been several debates on this issue and I am glad to hear that many of the Minister's recommendations have been taken on board. In particular, the Government supports this Private Members' Bill insofar as it extends the time limit for complaints in regard to long-term financial services, similar to the extension set out in section 51 of the Government Bill.

Section 3 of Deputy Doherty's Bill amends subsection (4) of section 57BK of the Central Bank Act 1942, which now reads that, "The Financial Services Ombudsman [...] is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without undue regard to technicality or legal form". The Government is now satisfied with the drafting of this section as it was modified after our earlier discussions at pre-legislative scrutiny and is in line with section 12(11) of the Government's Bill.

Section 5 of the Bill deals with the amendment of section 57BX of the Central Bank Act through the extension of the time limits to complain to the Financial Services Ombudsman. Section 5 was amended in the Dáil and it reflects a similar provision in the Government's Bill which extends the time limits for complaints regarding certain long-term financial services to six years from the date of the conduct complained of or three years from the date the complainant knew or ought reasonably to have known about the conduct.

The new time limits for long-term financial services will apply to complaints made to the ombudsman about conduct that occurred during or after 2002 and the service in regard to which complaint is made must not have expired or been otherwise terminated more than six years before the date of the complaint. There has been a productive engagement between officials on both sides to seek to ensure that the sections on time limits in Deputy Doherty's Bill and the Government's Bill are aligned with each other and carefully drafted. I am satisfied with this aspect of the legislation and must thank the Office of the Parliamentary Counsel for its help in this regard.

However, section 2 of the Bill inserts a definition of long-term financial service as being, "a financial service where the actual or intended duration of the service is 5 years and one month or more". This is one area where the Government currently disagrees with Deputy Doherty's drafting of the Bill. The concern that the Government has about this definition was raised by then Minister of State, Deputy Eoghan Murphy, in the Dáil on Report Stage of this Bill. The Government is concerned that this definition of long-term financial service could include a wide range of policies or services that are subject to annual renewal.However, it is ultimately a matter for the courts to decide if annual policies are included in this definition.

For the avoidance of doubt, we have tried in our Bill to exclude explicitly annual policies from the definition of "long-term financial service". The cost of insurance is expensive as is well known and we have concerns that the Sinn Féin definition of "long-term financial service" could increase costs for insurance companies through extra record-keeping requirements and increased costs in insuring themselves against more claims and uncertainty about older policies. I am keen to avoid any potential misrepresentations and misunderstandings by copper-fastening a definition of "long-term financial service" which avoids passing to consumers the higher costs which may become embedded in the cost-bases of insurance companies into the future. For short-term financial services, consumers have six years to complain about conduct. This period should be sufficient for short-term financial services.

We will be proposing an amendment to the definition of "long-term financial service" in the Bill on Committee Stage. It is worth pointing out that, under the current regime, the EFSO will inform the Central Bank of any matter arising during an investigation which he feels is indicative of some pattern, for example, mis-selling, so that the appropriate regulatory action may be taken. The ability to make recommendations to the regulatory authorities will continue under section 18 of the new legislation. This is also intended to deal with cases which may fall outside the six-year rule as it would allow the Central Bank of Ireland to engage with providers in respect of wider issues. The recent Central Bank investigation and redress of €71 million provided to customers in respect of the mis-selling of payment protection insurance is a case in point.

Section 6 amends section 57CA of the Central Bank Act and reinforces the mediation procedures which should operate in the ombudsman's office. I am happy to note that Deputy Pearse Doherty has made changes to this section on mediation. The Private Member's Bill, as initiated, would have required a financial services provider to provide the ombudsman with convincing reasons for not going to mediation when choosing not to engage with the mediation process. I am glad Deputy Pearse Doherty has taken on board the Government's view that maintaining the voluntary ethos of mediation is important and that the focus should be on equipping the ombudsman with the power to promote engagement in the mediation process, which is now at the core of the Government's Bill and that of Sinn Fein.

Section 7, amending section 57CI of Part VIIB of the Central Bank Act, changes the categories of determinations that the ombudsman can make. In the interests of more transparency, Deputy Pearse Doherty’s Bill proposes to amend the categories of findings which may issue to a consumer following an investigation in relation to a complaint. The four new categories are: (a) is upheld; (b) is substantially upheld; (c) is substantially rejected, or (d) is rejected. Subsection (2) of this section details the reasons for which a complaint can be found to be upheld, substantially upheld or substantially rejected, whereas subsection (3) lists the recourse that the ombudsman is able to direct from the financial service provider. This is a reasonable update and modernisation of the original legislation which will being more clarity to consumers. This will be a good outcome for the ombudsman’s process but also for consumers and will be in addition to the publication of decisions as provided for in my Bill. Sections 4 and 9 are consequential amendments to update and restate the existing legislation and update the categories of findings.

Section 4 amends section 57BS of Part VIIB of the Central Bank Act and repeats the existing name-and-shame provision. It also updates the section with the new categories of findings set out in section 7 of the Bill. If three complaints about a regulated financial services provider are made to the Financial Services Ombudsman in the preceding year and if the ombudsman finds these to be upheld or substantially upheld, such a provide will be named publicly by the ombudsman. This name-and-shame provision is a relatively recent change in respect of the arbitration of financial services complaints and has also been maintained in the Government's Bill.

Section 9 restates section 57CP of the original legislation. The latter gives the High Court the power to grant injunctions in some cases and restricts this power in other circumstances. The only change, as far as I am aware, is updating the references of determinations of the ombudsman, which are amended under section 7 of the Private Member's Bill. Therefore, I have no views on this section.

Section 8, amending section 57CL of Part VIIB of Principal Act, increases the time consumers have to appeal a decision of the ombudsman to the High Court from 21 days under the existing legislation to within 35 days of the date of notification of the decision of the Financial Services Ombudsman. This timeline is similar to that proposed by the Government on Report Stage in the Dáil and is a measure that should help consumers.

I turn to the interaction between the Government Bill and the Private Member's Bill. It is important to point out that if the Government Bill is enacted, it will repeal Part VIIB of the Central Bank Act 1942, which sets out the provisions in respect of the Financial Services Ombudsman. Deputy Pearse Doherty's Bill amends that part of the 1942 Act so the Government's Bill, when enacted, will repeal the provisions this Bill is proposing to amend. This will be in accordance with the recommendations of the relevant committee during pre-legislative scrutiny. Furthermore, following the productive engagement during the development of Sinn Fein’s legislation, the Government is willing to make amendments to its own Bill to take on board some of the new provisions that we agreed with during the passage of the Private Member's Bill. One such amendment, which we will make on Committee Stage, involves increasing the time to appeal a decision of the ombudsman to the High Court from 21 days to 35 days, as proposed in section 8 of Sinn Fein’s Private Member's Bill, as passed by the Dáil. In addition to this amendment, I will also look at the range of categories of decisions that the ombudsman can make after an investigation. The increased range of findings will be a good outcome for the ombudsman's process and for consumers and will be in addition to the publication of decisions as provided for in my Bill. As I said earlier, we will also return to the definition of "long-term financial service" on Committee Stage.

I thank the House for giving me the opportunity to deal with this complex Bill over a number days. I have discussed the matter with staff in the Department of Finance and we are determined to get it right. I am sure the House will give us the latitude to provide the experience and knowledge to improve the Bill. That is why we objected to it going through all Stages this evening. I hope it will move quickly. I undertake to move it as quickly as possible. That said, we have got to get the definition relating to long-term products right. I hope the House will give us the opportunity to do that. We are facilitating the Bill on Second Stage and I look forward to any further comments.