Willie Penrose (Longford-Westmeath, Labour)
Link to this: Individually | In context

Question 67: To ask the Tánaiste and Minister for Finance the number of incidents and value of overcharging of customers by banks and financial institutions each year during the period 2002 to 2007; and if he will make a statement on the matter. [7717/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The issues raised by the Deputy fall within the remit of the Financial Regulator. I understand that the majority of overcharging issues actually predate the establishment of the Financial Regulator in 2003 and, accordingly, statistics are not available in exactly the format requested by the Deputy.

Following a request for similar statistics in PQ No. 2351/08 (on 30 January, 2008), my Department sought the information from the Financial Regulator and had in the meantime provided information in answering that PQ which was the most up to date available at that time pending the response from the Financial Regulator. I can now say that previously unpublished information recently provided in response to my Department's request by the Financial Regulator indicates that the amount of €167 million (this amount is unchanged) relating to overcharging issues dating from the early 1990s identified in the Financial Regulator's Annual Report for 2006 related to 38 financial service providers and 624 individual charging issues. Approximately 80 per cent of the €167 million has been refunded or paid to charity as appropriate. I have arranged for a copy of the information supplied by the Financial Regulator to be forwarded to the Deputy.

This area has been a major focus of the work of the Financial Regulator since its establishment in 2003. In responding to these issues, the main priority has been to ensure that all affected customers receive full and speedy refunds and systems and controls are put in place to deal with the issues that led to overcharging so that future errors may be eliminated or minimised. This has been reflected in the substantial progress made in the reimbursement programmes and a decline in the number of new charging issues reported to the Financial Regulator, as financial service providers have adopted a much more rigorous approach to their internal controls, IT system processes and compliance procedures.

The Financial Regulator is closely monitoring the reimbursement programmes to confirm that they are carried out fully in line with the general principles established by the Financial Regulator in 2005. These ensure that financial service providers make all reasonable efforts to make refunds, with appropriate interest, to all customers who have been affected by overcharging and that the financial institution concerned cannot benefit in any way from amounts that cannot be repaid. Details of the main reimbursement programmes are published in the Financial Regulator's Annual Reports.

It is important to note that the high number of overcharging issues identified is largely due to system reviews and allocation of additional compliance resources by credit institutions and insurers following the establishment of the Financial Regulator in 2003 as well as the reviews initiated by the Financial Regulator and the commencement of its customer-oriented on site inspections at that time.

In addition, under the Financial Regulator's Consumer Protection Code, which came into full effect on 1 July 2007, regulated entities must speedily, efficiently and fairly correct any charging or pricing errors and notify affected consumers of any charging or pricing errors that may have a negative impact on the cost of a service or the value of a product provided.

The whole regulatory structure for Irish financial services was reformed with the establishment of the Financial Regulator, with its statutory consumer protection mandate, in 2003. The progress made on this issue is therefore a reflection of the work of the Financial Regulator in implementing a strong principles-based supervisory approach, in fostering a compliance culture in the financial services industry and in promoting and safeguarding the interests of consumers.