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Dáil Éireann debate -
Tuesday, 30 May 2017

Vol. 952 No. 3

Financial Services and Pensions Ombudsman Bill 2017: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

The Minister of State has concluded his Second Stage speech. I call Deputy Michael McGrath.

I wish to share my time with Deputy John McGuinness. I will speak for 12 minutes and he will have eight minutes.

I very much welcome the opportunity to contribute to the debate on the Second Stage of this Bill. For the past number of years we have been calling for and proposing specific measures to improve consumer protection for persons who purchase financial services products. It is worth reminding ourselves why stronger consumer protection is needed in this sector. We have seen banks and lenders in this country undoubtedly treating customers very shoddily in recent years. We have had a number of examples of that. As a party we have consistently highlighted the high standard variable interest rates to which mortgage holders in Ireland are subject, particularly by certain banks. Most recently we have had the tracker mortgage scandal where thousands of customers were denied their contractual right to return to a tracker mortgage interest rate following a period of time on a fixed interest rate. We know in some cases that this has cost families their home and in other cases families incurred very serious financial costs for which they cannot be recompensed given the impact it had on their quality of life at that time. Those are just some of the reasons strong financial regulation is required to protect consumers.

Fianna Fáil welcomes this Bill and will be supporting its passage through Second Stage. The Bill essentially provides for amalgamating the Financial Services Ombudsman and the Pensions Ombudsman into one single Financial Services and Pensions Ombudsman. This move in itself is worthwhile as clearly a pension is a financial product and I believe this will clear up much of the complexity around the area of consumer complaints. This Bill is in many ways inspired by the Redressing the Imbalance report published by the Free Legal Aid Centres, FLAC, in 2014. This report is a comprehensive piece of work that has played a substantial role in the debate on consumer protection across the financial services industry. FLAC and the authors of that report need to be commended for the extensive work they have done and in respect of other projects around legal protection for individuals who purchase products.

Fianna Fáil's Bill on this area predates that 2014 report but also sought to address some of the issues highlighted in it. The Sinn Féin Bill passed Report Stage last week. I would like to again commend Deputy Pearse Doherty on his work on that Bill. We are also pleased to support that Bill, which addresses the issue of the six-year rule, and we brought forward our own legislation on that issue previously.

However, I would like to take this opportunity to highlight a concern that we have, which I mentioned during the later stage of the debate on the Sinn Féin Bill last week, namely, the need to ensure that we have consistency regarding the terms and conditions that govern access to the Financial Services Ombudsman. The Minister of State, Deputy Eoghan Murphy, clarified last week that the Government Bill, when it is eventually enacted, will supersede the Sinn Féin legislation, which is likely to become law first. We have to ensure that the terms governing the Statute of Limitations, also known as the six-year rule, are treated consistently so that we do not have one cohort of customers accessing the ombudsman under one regime and then a new item of legislation replacing that with new terms. We need consistently, and that is very much our position on this issue.

A further concern I would have is that by merging the two bodies we must ensure that we are not in any way diminishing the service that they provide currently separately to society. This change must not lead to a reduction in the quality of services that they provide. The new ombudsman must be adequately funded and resourced to do the job that it has been asked to do. Will the establishment of this new ombudsman lead to a hike in the levy charged on financial service companies? That is an important question that needs to be answered because, as we all know, ultimately these levies get passed back to the end consumer who has to pick up the bill.

There are a few very important provisions in this Bill that I believe everyone in the House will support. According to the FLAC report in 2014, the legal definition of "consumer" was deemed to be too loose. The ombudsman’s primary goal is to provide a strong appeal and complaint process for small businesses, clubs, partnerships and individuals. With the definition of the consumer tightened up in this Bill it ensures that the ombudsman will be solely accessed and have its services used by these people.

The Bill covers any individual acting outside the course of business. It covers a sole trader, partnership, trust, club or charity with an annual turnover of €3 million or less in the previous year. The Bill also covers small incorporated companies with a turnover of €3 million or less in the previous year. This is a welcome development as it guarantees that the Financial Services and Pensions Ombudsman will be there for the people who need it the most, the people who do not have the ability or resources to go straight to the courts system.

Another major criticism of the current system lies in the area of the six-year rule, an issue on which I have spoken many times in this House.

Today a customer has six years from the date the alleged offence or subject matter took place to make a complaint. This is wholly inadequate. First, it is regularly much later when a customer realises that an offence has taken place but by then it is too late to make a complaint, leaving the customer in the lurch and, quite possibly, out of pocket. This Bill seeks to address the matter by extending the time limit for pensions and long-term financial products. Where a complaint relates to pensions or a long term financial product - we had a debate last week about what constitutes a long-term financial product - the six-year period can be extended to up to three years after the complainant knew, or ought reasonably to have known, about the alleged offence. Further, the ombudsman has a discretionary power, in certain circumstances, to extend the limitation period for pension and long-term financial service complaints where he or she considers it just and equitable to do so. There is a baseline provided for in this respect from 2002 onwards in the Bill. This is again a welcome development. However, I would strongly urge that this is regularly monitored to assess if it is having a desired effect.

It would be interesting to see over time how often the ombudsman decides to use this discretionary provision. Specifically, it may highlight areas where the current provisions in this Bill may have to be improved. I spoke last week about the mis-selling of payment protection insurance policies. The Central Bank carried out an investigation and consumers who bought from 1 July 2007 onwards and who qualified got some compensation. All those who bought prior to July 2007 are currently excluded from claiming compensation but I hope and expect that people who were genuinely mis-sold a product from 2002 to 2007 will have the potential to gain access to the ombudsman under the provisions of this Bill. These changes are welcome and it ensures customers are given adequate opportunity to make a complaint against the financial service or pension provider.

To move to more functional areas and the operational elements, the Bill removes the Financial Services Ombudsman's bureau, the Financial Services Ombudsman council and the office of the Pensions Ombudsman. Complaints will now be overseen by a new financial services and pensions ombudsman and it will cover a wide range of financial products. This will simplify the whole complaints process. The ombudsman will be overseen by a newly established financial services and pensions ombudsman council, which will assess the efficiency and effectiveness of the ombudsman and will determine the levy on financial service providers. This will partly fund the ombudsman but make no mistake, it will not be the financial service providers who foot this bill; as I stated earlier, the customer will do it and that is why we must ensure this is carefully monitored.

The newly established financial services and pensions ombudsman will be tasked with overseeing the complaints process. Its primary function is to receive and resolve complaints relating to financial products, long-term financial products and pensions. The ombudsman is still required to act "in an informal manner” and "without undue regard to technicality and legal form". In the 2014 Free Legal Advice Centres report, this was highlighted as potentially encouraging complacency in the ombudsman and as a result it led to investigations that were unsatisfactory for the complainant. This amendment appeared on Second Stage in the Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014 from last week but was removed from that Bill. As it does not appear in this Bill, the Minister of State might clarify intentions in that regard?

The Bill outlines the different ways the ombudsman can facilitate a settlement to each complaint. Very often mediation has proven to be very successful at reaching a resolution to many complaints and this process should be encouraged in the appropriate circumstances. Where mediation is not possible, the new ombudsman, similarly to the Financial Services Ombudsman, will be able to undertake a full investigation. The ombudsman will have extensive powers in this regard. For example, the ombudsman will have the power to require attendance and compel the relevant parties to provide documentation that is relevant to the complaint. Again, in the 2014 report it was discovered when an oral hearing was not held by the ombudsman, many complainants felt they were denied their day in court, as such, where they could deal with the financial service provider face to face. Under this Bill, the newly established ombudsman will have flexibility and discretion when it comes to holding oral hearings. I urge the ombudsman to be cognisant of this issue when making such decisions.

No complaints mechanism is worth the paper it is written on unless there are sufficient powers to arrive at a decision and to order financial redress to the complainant if found in his or her favour. These powers are enhanced with this Bill. First, under the new regime there will a number of possible decisions from the ombudsman, including that the complaint may be substantiated, not substantiated and partly substantiated in one or more specified respects, for example. A substantiated decision means the financial service provider not only has broken the law but has unreasonably done so and was improperly or unjustly motivated. The compensation ceiling is currently set at €250,000. I have a concern that in some cases this ceiling may be too low and would urge the council and the Minister to regularly review this ceiling to ensure customers are being compensated in full for the cost of complaints that have been upheld.

The decisions of the ombudsman will be published in anonymised form. This is important so there is transparency in the process and everyone can see the type of complaints that are being brought to the ombudsman. This is important for individuals who feel they have been poorly treated but may lack the confidence to proceed with a complaint. Further serial offenders against whom three or more complaints are wholly or partially substantiated in a year will be named and shamed, and this is a power we sought as well. This is a welcome power to give the ombudsman as it will serve to encourage financial providers to take consumer protection seriously.

In summary, Fianna Fáil welcomes this Bill as an important step in the right direction to strengthen the protections available to consumers. We look forward to engaging in a process when this Bill comes to Committee and Report Stages.

I also welcome the Bill, the various changes that will support the consumer and the definition of "financial services". We must reflect on exactly what will happen. Amalgamating an office and putting this office in place is only one step in the right direction. The next step is seeing how seriously the ombudsman will take up the legislation and implement its various parts. In the past we have seen that as a country we are almost incapable of regulation. We must reflect on what happened in the banks and other financial institutions during the collapse. We had legislation, an ombudsman and regulators in place but when it came to it, no risk manager was ever challenged within the banking system as to whether they saw anything going wrong in the banks that they should have reported to the regulator or Central Bank. I still pose the question, as many do, as to what action was ever taken to find out if risk managers ignored the signs in the financial institutions at that time so that the collapse that happened could have been averted, along with the burden of debt heaped on the Irish citizens.

In his evidence to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, Mr. Jonathan Sugarman made it perfectly clear that he and his superiors went to the Central Bank and the complaint was made and lodged but never followed up. Look at the banks that went bust and the rescue package that had to be put in place, yet nobody has answered the central question of what risk managers did relative to the legislation and their obligations at that time. Judging from Central Bank reports, we must ask ourselves the very same question now. Are there practices in the banks that give rise to the concern shared by others over the years relating to the activities of the bank?

When we move from the banks to the consumer we can see the number of complaints that have been made, for example, relating to insurance. Insurance for property, cars and trucks has increased and taxi drivers complain bitterly. A submission was made to me by the taxi drivers who service Dublin Airport, which come in or out of town at a general fee or charge of €20. Against that, their monthly cost for insurance has risen from €100 to €150 to €290 per month. Where is the explanation for that or the action of the regulator or Central Bank given the complaints being made? Why is it that people coming home from abroad cannot get cover or driving history recognised?

Why are businesses throughout the country threatened because of insurance costs? They cannot afford them. The Minister has a report and the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has a report yet nothing concrete has been done to reduce the costs.

Many of the complaints made have not been processed to the extent that action has been taken arising from them. The same goes for the pension funds, and one could speak of the ward of court funds in the same regard. Who will monitor these funds? What responsibility will the ombudsman or this office undertake to ensure in reality that the wrongs we have experienced in the course of the deliberations of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach are addressed? The consumer feels unrepresented, and the argument put forward by the Central Bank or those responsible for consumer issues is less than convincing. In fact, when some of the tracker mortgage issues were raised with the banks, in the beginning they did very little - everything, in fact, not to address the issue. Now that the issue has been exposed and is being dealt with, again through the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, the banks are still doing their best not to take on their full responsibility. There are individual tracker mortgage holders out there who still cannot get themselves included in the review process even though everything written down in their cases would point to the fact that they should be in the process. There has been the Ulster Bank Global Restructuring Group, and Ulster Bank has questions to answer about that. The commitments it gave regarding actions it would take were never fulfilled. It then uses the power of its might to deal with the customers, and the customer again feels unrepresented.

I point the Minister of State to what happened recently with the Office of the Director of Corporate Enforcement. Why in the name of God did that happen? I ask the House to consider all the other regulators, including the regulator with the bank, and consider what happened. It seems the citizen is shortchanged all the time and as soon as the banks and other institutions can get to their feet and get themselves covered, they again turn around and kick the customer. They do not observe customer rights in most cases and, in fact, in general, pay lip-service to the committee system of these Houses. As a result, the customer does not get the rate that should be applied and the families concerned have to carry the brunt of poor administration in this country. We seem to be incapable or institutionalised to the extent that nothing matters but the institution itself. Now, as we sell the State's shares in AIB and begin to release them from public ownership, we are throwing further to the wolves those who are in debt to those banks and who cannot get to grips with it.

I wish to point to the courts system and the cases that end up there. The repossession courts are an absolute disgrace, and we have not addressed that problem. As a result, thousands of cases are poorly managed by the bank and ignored by regulators and anyone else who took the complaints from the individuals concerned. Citizens of this country are being forced to go to court as defendants when the State has abandoned them in the first place. This is the kind of strong regulation we need. We need strong regulation, we need strong legislation and we need strong personalities not to be afraid of the might of the banks but to put the citizen at the centre of their thinking regarding the implementation of this law or any other laws.

When one looks back on the financial collapse, what was sold and the various accountancy organisations that stood over what was being sold, stood over the poor regulation and stood over the breaking of laws and did not regulate their own members, is it any wonder we are where we are today?

Sinn Féin welcomes the Bill. I speak on behalf of Deputy Pearse Doherty, who sends his apologies. This is a Bill of two parts. First, it merges the Offices of the Financial Services Ombudsman and Pensions Ombudsman and, second, it overhauls much of the consumer protection rules when it comes to making complaints. Of most importance is the removal of the so-called six-year rule. This second part has been debated a great deal because much of it is found in Deputy Doherty's Private Members' Bill, which is now awaiting a Seanad reading.

I will return to that content, but it is worth considering first the merger of the Office of the Pensions Ombudsman and Financial Services Ombudsman. It is important that this merger does not pass without scrutiny as the other details of the Bill are discussed. In this country, we have become so used to the language of austerity that words such as "merger" set off alarm bells for many of us that the real intent is cuts. After all, there seemed to be no democratic demand for such a merger. The basis seems to be the regulatory impact assessment by Mr. Hinz of the World Bank, who concluded there was no compelling evidence of negative consequences. This is a very weak basis on which to proceed with merging two very important bodies that protect consumers. After all, when we consider the tracker scandal and the PPI scandal, can we really say this is the right time to tinker around with the consumer protection bodies of the State? This is not to mention the rip-off being carried out by insurers on drivers, small businesses, home owners and now community groups and facilities day in, day out.

Reform of consumer protection law is required, and this opportunity could have been used to take a more radical approach. The strict power of the ombudsman to only rule on what is legal as opposed to what is fair frustrates many people, and this frustration is understandable. The Central Bank does not want to hear from individuals, and the ombudsman can only stick to narrow legal battles. That is the situation for consumers in this country: when something stinks, everyone smells it but no one seems to be able to do anything about it. This merger should not and cannot put consumers at a disadvantage relative to where they are today. That means ensuring the new office is properly resourced at all times.

As I said, much of the Bill complements Deputy Doherty's Private Members' Bill. The Dáil has already spoken on a number of issues in this regard and it only makes sense that those decisions are reflected in this Bill. It is in no one's interest that we have conflicting pieces of legislation one after the other. Regarding the six-year rule, which is of huge public interest, it is important that the public is not let down by the small print. The proposal before us in this Bill excludes many people who rightly believe they should have their day before the ombudsman. The definition used in this Bill, excluding as it does annually renewable products and unilaterally cancellable policies, is far too narrow. It goes against the spirit of what this House wants and it needs to be changed. This is an area where my party will table amendments.

The Bill also represents a big step forward in making mediation the rule, not the exception. This mirrors the reality on the ground whereby the Financial Services Ombudsman has vastly increased the use of mediation. I note the Minister successfully amended Deputy Doherty's Bill to mirror this section 58. The Bill also differs on the issue of the window in which an appeal can be made to the High Court. The Government Bill seems to go along with the standard rules of the court which allows 21 days as a rule although recognising the right of the courts to be flexible. Deputy Doherty managed to win the support of the Dáil for a 35-day window, so this should be reflected here in this Bill.

I warmly welcome the new provisions allowing the Ombudsman to publish findings in full. This is a significant improvement. As the Minister knows and as he has accepted, Deputy Doherty's Bill brought in a new range of findings so that now there are four possible findings instead of three. Again, I see no reason this Bill should not follow the Dáil's view on that issue. My party supports the Bill and will engage fully through amendments on Committee Stage. However, the issue of the merger is not a foregone conclusion for us and the rationale given so far is quite weak.

Regarding the Bill, which seeks to merge the offices of the Financial Services Ombudsman with those of the Pensions Ombudsman, I and my Solidarity colleagues need to hear some guarantees on the issue of resources and staffing before we can give any measure of support.

A case can be made that the intermeshing of pensions and other financial products is a reality and that the same private financial institutions span both areas and that, therefore, having two separate ombudsman offices may not make sense. However, the genesis of the Bill lies in the previous Government's public services reform plan, the brief of the steering group for which was to merge and cull various Government offices, with a view to reducing overall public service numbers. Some of the recommendations made by the group are highly objectionable from a policy perspective such as the downgrading of the Irish Human Rights Commission. Overall, the approach of reducing the number of people delivering public services is one we oppose.

In the case of the office of the Pensions Ombudsman, prior to the proposed merger it has dealt with understaffing issues, while at the same time witnessing an increase in its caseload of almost 80% between 2011 and 2015. If anything, the merged entity should have an increased staffing level to deal promptly with complaints that come to its door. I challenge the Minister of State to detail the resources the office will have available to it. It would be remiss of us to debate the topic of having a statutory office to deal with the massive increase in pension related complaints without getting to the root source of the crisis in the private occupational pensions system. In the final analysis what use is it to perfect a complaints procedure when the problems are systemic?

Under capitalism, we are going backwards. Despite the rise in productivity achieved on the basis of technology which, if we had a sanely organised economy, should mean that the economically active population could easily support those in retirement, what do we have instead? I have figures from the Pensions Authority which show the dramatic decline in the number of defined benefit pensions in the private sector and the number of people covered by these schemes since 1991. The high point in the number of schemes during that time period was 1992, when there were 2,533 schemes. In 2015 there were a mere 715 schemes, of which 163 were frozen, while scores more underfunded. As for the number of workers covered, the high point was reached in 2006 when 269,529 workers were covered. Subsequently, there has been a catastrophic decline of more than half the number of workers covered to 125,955, well below the number in any period in the 1990s when the workforce was half of what it is today.

What can be deduced from this? Simply put, any private sector defined benefit pension scheme that is confined to one workplace, or even one branch of industry, as in the case of the construction sector, is doomed because of the demographic changes that take place within firms and branches of industry, leaving progressively fewer people paying into the funds and greater numbers of retired persons drawing from them. The ESB is a case in point. At one point, it employed 15,000 people and for the first four decades of its existence it had relatively few drawing from the pension scheme. Today, thanks to progressive job cuts and outsourcing, it has fewer than 4,000 employees and is projected to have 2,000 in the medium term, with multiples of that number drawing from the pension scheme. The solution is not to meekly accept the massacre of occupational pension schemes but rather to have a unified and society-wide occupational pension scheme into which the State pension would be fully integrated, as in the case of civil and public servants. Only this type of arrangement can deal with the demographic shifts that are inevitable within and between the different branches of the workforce.

The former Minister for Social Production, Deputy Joan Burton, made an announcement in 2013 that a universal pension scheme would be established for private sector workers. On the surface, it could have been a step in dealing with the crisis many workers without pensions will face on retirement, but, of course, it never happened. The Organisation for Economic Cooperation and Development, OECD, was asked by the former Minister to come up with recommendations by February 2013 for how such a scheme would work. The OECD is one of many international institutions the publications and commentary of which consistently seek to drive a pro-capitalist agenda. I do not have time to go into the eventual recommendation with which it came up, but the parameters it was set by the then Minister were very flimsy. Essentially, similar to the scheme that was supposed to be in place in the construction sector, the Government suggested every employee in the private sector automatically opt into a pension scheme which would be supervised by the National Treasury Management Agency and that deductions be made from wages, alongside contributions from employers to fund pensions. The then Minister went on to say it was not the time to introduce such a scheme but that it could be implemented when the recovery happened. There is still no sign of it today.

There are a number of major problems that need to be addressed in how pension schemes are run for private sector and semi-State sector workers. First, the private pensions industry, to be blunt, amounts to daylight robbery. In October 2012 PricewaterhouseCoopers, PwC, published a damning report which revealed that private pension companies were siphoning off up to 30% of funds in various administrative charges and that the smaller the number of workers paying into a particular scheme the higher the deductions. What PwC did not mention was the additional waste of resources by private pension companies engaging in competitive advertising. Second, the investment decisions of private pension firms proved to be a disaster in the course of the crisis. The investment practices of schemes run by firms operating in Ireland are among the least regulated in Europe. In a 2009 report the OECD highlighted that Irish-run funds had lost an average of 37.5%, compared to 16.8% in Denmark where risky investments were limited by regulations.

I welcome the opportunity to take part in the debate. The Financial Services and Pensions Ombudsman Bill 2017 will establish a new office that will amalgamate the offices of the Financial Services Ombudsman and the Pensions Ombudsman. The Bill will provide for the investigation and resolution of complaints by a number of means, including internal procedures, mediation and formal investigations. The range of financial services covered has been extended to include creditors not otherwise subject to regulation by the Central Bank such as, for example, pawnbrokers and certain hire purchase and mortgage lenders. The Bill will also consolidate the statutory arrangements for handling consumer complaints about financial services, pensions and related products and provide for the staffing and oversight of the merged offices. It will also define the power and functions of the new ombudsman and establish a new council that will oversee the functioning of the ombudsman's office. It is clear that the amalgamation of the offices will not significantly reduce the overall costs of the running of the services, but it will allow for the sharing of expertise and a greater pooling of resources.

It is important to make reference to the review carried out by Bearingpoint management consultants. As part of the amalgamation process, Bearingpoint was commissioned to undertake a strategic and operational review of the practices and procedures of the two bodies. It found a number of difficulties, including, in the case of the Pensions Ombudsman, a loss of skilled personnel and, in the case of the Financial Services Ombudsman, a lack of flexibility, transparency and customer orientation. The review also identified problems in both offices caused by the length of time it was taking to resolve cases. It recommended a number of proposals, including increased resources for mediation and a greater sharing of information with stakeholders so as to highlight customer protection issues and increase awareness of how to address potential issues before they became systemic.

I would like to highlight some provisions included in the Bill which I believe it is important for the public to understand and of which they need to be made aware. The new office will be funded by way of a levy on financial service providers in the case of complaints about financial service providers and moneys will be provided by the Oireachtas to deal with complaints against pension scheme providers.

Future appointments to the position of ombudsman and deputy ombudsman will be made by the sitting Minister for Finance following consultation with the sitting Minister for Social Protection from among persons selected by the Public Appointments Service. I trust that this will lead to a transparent selection process. The maximum term of office of an ombudsman or deputy ombudsman will be five years.

The functions of the ombudsman as set out in the Bill will be to investigate complaints in an appropriate manner proportionate to the nature of the complaint by either informal means, mediation, formal investigation, including oral hearings if required, or a combination of these approaches. Other functions of the ombudsman will include improving public knowledge or understanding of the role of the ombudsman in the types of disputes he or she may handle. The ombudsman will also be charged with engaging with financial institutions and pensions providers to promote active engagement and consumer education in respect of their internal dispute resolution practices and processes.

It is important to set out the role of the financial services and pensions ombudsman council. The primary role of the council will be to oversee the operation of the ombudsman and provide funding by means of a levy on financial services providers. The council will replace the current Financial Services Ombudsman Council and comprise between five and seven members, including the chairperson. In practical terms, the current chair and members shall be deemed to assume equivalent positions on the new council on its establishment. All subsequent members are to be recommended by the Public Appointments Service and appointed by the Minister for Finance except for one ordinary member who will be the nominee of the Minister for Social Protection.

I welcome the fact the chairperson will be required to have knowledge and experience of consumer issues relating to the provision of either financial services or pension services. I also welcome the fact that at least two ordinary members of the board are to have experience of consumer protections issues relating to financial services and that at least two of the ordinary members are to have experience in the financial services and pensions industries, respectively. This represents a considerable increase in consumer representation on the board. The functions of the board will include the following. It will determine and prescribe the financial services industry levy. It will oversee the efficiency and effectiveness of the office and advise the sitting Minister for Finance on matters relating to it. The board will also advise the ombudsman when requested including on guidelines for complaints processes and investigations.

I am pleased the Bill clearly identifies who can make a complaint under the legislation. Complainants may include a consumer, an actual or potential beneficiary or a person acting on his or her behalf, or a person specified by way of ministerial regulations. An actual or potential beneficiary includes a current or former member of a pension scheme. While I welcome the Bill, I have concerns about public awareness of the measures available to people who believe they have been mistreated in matters relating to either financial services or pensions. I have dealt with a number of cases on behalf of constituents in Dundalk and Drogheda where it was obvious they had been treated unfairly by a financial institution or pension provider. The remedies available to them were inadequate and in many cases the people concerned were afraid to take on large institutions on foot of the perception that one simply cannot win in such circumstances. I hope the Bill will help to address some of the issues faced by my constituents and others throughout the country who feel they have been treated unfairly by financial institutions.

I thank the Deputies for their contributions and constructive engagement on the Bill. The Minister of State, Deputy Eoghan Murphy, will be involved in the more detailed consideration of its provisions on Committee Stage. Everyone can agree that the Bill is important and will be a milestone in the further development of consumer protection legislation. I will respond to some of the issues raised by Deputies in the course of the debate and we will have an opportunity to deal with other matters on Committee Stage.

Deputy Michael McGrath referred to the need for adequate funding and resources for the office and also asked for an increase in the levies on financial services providers. The levies are a significant element of the funding of the office and will be prescribed by the council under section 43. It will be a matter for the council to ensure the ombudsman has adequate funding but the amount of the levy must not exceed the sums necessary to fund the operation of the office under section 43(4). Funding in relation to pension complaints will come from funds provided by the Oireachtas as heretofore.

Deputy Quinlivan referred to the rationale for the amalgamation of the offices. This was set out in a recommendation of the 2013 report and amended by the then Minister, Deputy Joan Burton, in 2013. The lines between financial services products and pension products are increasingly blurred and some pensioners would not be able to complain to the Pensions Ombudsman if the product they were sold was in fact a financial service. To reply to Deputy McGuinness, court proceedings can be stayed to allow the ombudsman to investigate a complaint. That might be relevant in some repossession cases.

As discussed, the most important provision in the Bill is a proposal to extend the time limits to complain to the ombudsman. There is a strong rationale for the changes set out in the Bill which extends the time limits for complaints about conduct in relation to a long-term financial service to the same time limit that applies to pension products, namely, 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 Government's definition of "long-term financial service" in section 2 is intended to include many long-term financial services products and also income-continuance policies. Our understanding is that there is a standard clause in these income continuance policies whereby providers cannot unilaterally cancel them. This is to ensure that providers cannot just cancel a policy when a customer becomes ill. We may wish to review the clause on Committee Stage to ensure that it captures our intention correctly and is not open to misinterpretation. I am sure Members will also want to ensure that this occurs.

For short-term financial services, the time limit for a complaint to the ombudsman remains unchanged at six years from the date of the conduct complained of. Examples of the short-term services in this category are car insurance, home insurance and travel insurance. Six years from the date of the conduct should be sufficient time to make a complaint on issues because the service will most likely be concluded within that timeframe. Furthermore, if short-term annual products were to be considered long-term in nature, it would place a larger administrative burden on companies which might have to insure against the cost of possible future claims resulting in higher costs for customers. This is not an outcome any Member of the House would want when many of us have worked hard to address higher costs in recent months. It is critically important that we do not inadvertently legislate for actions that result in higher costs for consumers which would become embedded in the insurance industry and in premium costs in the years ahead. Long-term financial services include mortgages and tracker mortgages.

When the heads of the Bill underwent pre-legislative scrutiny last October, the Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014, which was introduced by Deputy Pearse Doherty, was also reviewed and debated by the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. The Private Members' Bill aims to provide for the strengthening of the functions of the Financial Services Ombudsman, the consumer complaints procedure and related matters. Many of the principles of the Bill are also represented in the Bill before the House. We welcome the progress of Deputy Pearse Doherty's Bill, which passed the Final Stage in the Dáil last Tuesday, 23 May, and now proceeds to the Seanad. A significant amount of work has been done by Sinn Féin on its Bill which took into account many of the issues we debated during pre-legislative scrutiny and other Stages and this must be commended. A good engagement was also had with officials.

As the Minister of State, Deputy Eoghan Murphy, said on Report Stage of the 2014 Bill, however, we have some concerns about Deputy Doherty's definition of long-term financial services. We are concerned it might include a wide range of policies or services which are subject to annual renewal or policies which are not and cannot be considered to be of long-term duration. We are concerned that the impact of this very wide definition of long-term financial services might increase the cost of policies like car insurance or house insurance because insurance companies would be mindful of the possibility of claims being taken in a longer timeframe. As a result, they would pass additional costs to consumers. These costs would relate first to the administrative burden of keeping records for longer and second to the requirement to carry insurance against more possible future claims in a longer time period. In addition, there is concern that providers could deter their short-term customers from becoming long-term customers under Deputy Doherty's definition. They might refuse to cover customers after a five-year period or in the alternative increase annual premiums substantially after a five-year period.

As Deputies know, the high cost of insurance was debated on a number of occasions in the House, including as recently as Wednesday, 17 May. Increased costs are not an outcome any Member would want. We will have to review the definition of "long-term financial services" again in advance of Seanad Committee Stage to ensure there are no unintended adverse consequences for consumers.

I am keen to avoid any potential misinterpretations and misunderstandings by copperfastening the meaning of "short term" and "long term", which will avoid passing on higher costs to consumers that would become embedded in the future cost base of insurance companies. I reiterate that the published Government Bill discussed today, when enacted, will repeal Part VII of the Central Bank Act 1942. Deputy Doherty's Private Members' Bill amends this part of the 1942 Act. Therefore, this Bill, when enacted, will repeal the provisions Deputy Doherty's Bill proposes to amend and they will no longer be on the Statute Book.

Section 51 of the Government Bill provides for extended time limits for long-term financial services. The Government Bill is also more comprehensive than the Private Members' Bill. Following productive engagement during the development of the Sinn Féin legislation, the Government is willing to make amendments to its Bill to take on board some of the new provisions agreed during the passage of the Private Members' Bill. One such amendment, to be made on Committee Stage, is to increase 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 Féin's Private Members' Bill as passed by the Dáil. In addition to this, another Committee Stage amendment will be made to increase the categories of findings the ombudsman can make to ensure they are in line with section 7 of Deputy Doherty's Bill as passed by the Dáil. Following this amendment, these categories will be upheld, substantially upheld, substantially rejected or rejected. This will be a good outcome for the ombudsman process and for consumers. There will also be the publication of decisions, as provided for in this Bill.

It will depend on the terms of the financial services as to whether payment protection insurance falls within the definition of long-term financial service. There are many compelling cases of consumers being mistreated by providers or mis-sold products by those entrusted with the legal duty and responsibility to provide quality customer service. It is worth pointing out that under the current regime if a matter arises during an investigation by the Financial Services Ombudsman, which he feels is indicative of a pattern, that is, mis-selling, he will inform the Central Bank so that appropriate regulatory action may be taken. This 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 that may fall outside the six-year rule, and would allow the Central Bank of Ireland to engage with providers in respect of wider issues. The recent Central Bank investigation and redress given to customers on the mis-selling of payment protection insurance is a case in point.

Deputies may be aware of recent regulatory legislative changes, which will strengthen protection for consumers. In March, the Central Bank of Ireland published its consumer protection risk assessment model, which establishes a new and more intrusive approach for supervisory assessments of regulated firms regarding conduct and consumer protection risk management. This will apply to credit institutions, non-bank lenders, insurance undertakings, investment firms, large retail intermediaries, payment institutions and e-money institutions.

I thank Deputies for their contributions and the support for the Bill they have indicated. I commend the Bill to the House.

Question put and agreed to.
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