Ruairi Quinn (Dublin South East, Labour)
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Question 481: To ask the Minister for Finance if he has plans to amend Part 2, section 16, paragraph 3([i]b[/i]) of the Central Bank and Financial Services Authority of Ireland Act 2004 (details supplied); and if he will make a statement on the matter. [24527/05]

Ruairi Quinn (Dublin South East, Labour)
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Question 482: To ask the Minister for Finance if his attention has been drawn to the fact that many Irish citizens who purchased endowment mortgages in the late 1980s and early 1990s have ended up with a negative financial position and are facing a shortfall with regard to mortgages which they thought would have been completed by this time; if he proposes to take action to ensure that the financial institutions that sold such products will take responsibility for the situation; and if he will make a statement on the matter. [24528/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 481 and 482 together.

The Central Bank and Financial Services Authority of Ireland Act 2004 established a single statutory Financial Services Ombudsman, FSO, for all financial services firms. The ombudsman's office began operations on 1 April 2005. The ombudsman can investigate, mediate and adjudicate complaints related to conduct occurring up to six years before that complaint was made, including where the latest occurrence of the conduct being complained about happened within that period.

Prior to the establishment of the FSO, two non-statutory offices, in existence since the early 1990s, the insurance ombudsman and the ombudsman for credit institutions dealt with individual complaints in relation to financial services. The statutory ombudsman was empowered to take over the processing of any complaint being dealt with under those schemes. It is important to bear in mind also that while the Central Bank and Financial Services Authority of Ireland Acts 2003 and 2004 provided for the roles of both the regulator and the ombudsman scheme in relation to complaints about financial institutions, there is no diminution in the right of the consumer to have recourse to legal action through the courts.

There are no plans at present to amend the Central Bank and Financial Services Authority of Ireland Act 2004 with regard to the time limit for making complaints. The retrospection limit of six years provided in paragraph 3(b) is consistent with the approach adopted in the pensions ombudsman scheme. However, the Deputy may wish to note that my Department has been advised that the financial regulator has conducted a survey of the endowment mortgage market with a view to ascertaining the likely number of policies that may experience a shortfall on maturity. The main findings of the survey will be made available to my Department and the Joint Oireachtas Committee on Finance and the Public Service shortly. The financial regulator's consumer director has encouraged people to come forward if they are concerned about the possibility of having been mis-sold an endowment mortgage. The financial regulator has emphasised the importance of bringing complaints in the first instance to the financial institution from which they bought the policy.

There is already a substantial volume of legislation in place relating to these financial products. Following the enactment of the Insurance Act 1989, a code of conduct for insurance intermediaries and guidelines were drawn up by the industry in consultation with the then Department of Industry and Commerce. Key requirements of the code were that the intermediary should know the client and give best advice.

The Consumer Credit Act 1995, which commenced in May 1996, contains specific provisions in relation to endowment loans and in particular prescribes certain information which must be included in any application form or information document issued to consumers applying for such loans. For example, since the commencement of the Act all endowment loan application forms must contain a prominent notice to the effect that "there is no guarantee that the proceeds of the insurance policy will be sufficient to repay the loan in full when it becomes due for payment".

The Act also obliges that in instances where the borrower may be required to increase premium payments on the insurance policy during the lifetime of the loan, any document approving the loan must contain a prominent statement of this possibility. Similarly obligations apply where a policy is surrendered early resulting in a net loss to the consumer.

The Act also places an obligation upon insurers underwriting policies relating to endowment loans to issue a statement to the consumer every five years setting out not only the value of the policy at the time of issue but also a comparison of this valuation to the valuation at such date projected at the time the policy was first written and a revised estimate of the valuation at maturity.