Catherine Byrne (Dublin South Central, Fine Gael)
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Question 116: To ask the Tánaiste and Minister for Finance if he has plans to amend the legislation governing the Financial Services Ombudsman in order that he can make rulings on classes of transactions in respect of which refunds should be made instead of hearing each case individually. [2081/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Financial Services Ombudsman (FSO), established in April 2005 to deal with consumer complaints about financial service providers, has made a very significant contribution to protecting and promoting the interests of consumers of financial services. Where a complaint is upheld the Financial Services Ombudsman can direct the financial service provider to pay compensation to the complainant for any loss, expense or inconvenience sustained by the complainant and can also issue directions to the financial services provider concerned to change a practice relating to its conduct. Since its inception in April 2005 to end December 2007 the Financial Services Ombudsman has received 11,550 complaints and has concluded 10,700, 59% of which were settled in the complainants favour.

The role and functions of the FSO in dealing with consumer complaints strongly complements that of the Financial Regulator in protecting the interests of consumers of financial services as a whole. During the passage of the FSO legislation through the Oireachtas in 2004 it was stated, on behalf of the Minister for Finance, that the Ombudsman's remit essentially is to deal with individual complaints from customers of financial institutions and it is the responsibility of the Consumer Director in the Financial Regulator to deal with general issues relating to the protection of consumers.

The relevant legislation provides for co-operation between the Financial Services Ombudsman and the Financial Regulator on general issues relating to the protection of consumers. A Memorandum of Understanding has been concluded between the Financial Services Ombudsman and the Financial Regulator to ensure the efficient and effective handling of complaints. An issue drawing attention to a general breach affecting consumers can be referred by the Financial Services Ombudsman to the Financial Regulator. Such issues can then be examined by the Financial Regulator to consider if there are any suspected breaches of the relevant regulatory requirements including the Consumer Protection Code. The Financial Regulator can, as part of its administrative sanctions regime, seek to mediate or take regulatory action in relation to a firm including an order to make refunds to a firm's customers where appropriate. Last November I advised the Deputy that I would ask the FSO and the Financial Regulator to review their current co-operation arrangement to ensure that these work smoothly where a finding of the FSO in an individual case may have implications for a broader group of customers of a financial services firm. I am informed that the Ombudsman and the Financial Regulator met on Monday, 21 January 2008 and have reviewed their current co-operation arrangements as requested. They have indicated that the present arrangement is working satisfactorily and that they are preparing a joint submission in response to my request.

The Deputy will be aware that a recent High Court judgement confirmed that the Financial Services Ombudsman's power of direction, except in relation to a change in general practice, may only relate to an individual claimant and does not extend to payment of compensation for other consumers in relation to similar conduct of the financial service provider. The implications of the recent High Court decision will be referred by my Department to the Advisory Forum on Financial Legislation which has recently commenced its work. Submissions of the Financial Services Ombudsman and the Financial Regulator on this matter will be brought to the Advisory Forum.