Yesterday the Financial Services Ombudsman's report for 2011 was published. It highlighted the continuing problems we have by shining a light on the way the financial industry often treats its customers. Some 7,300 complaints were made to the Financial Services Ombudsman against financial institutions in 2011 relating to three broad sectors: banking, insurance and investments. Almost €2.25 million was repaid or awarded in compensation to customers of financial institutions last year on the direction of the Financial Services Ombudsman.
In 2009, the former holder of the office, Mr. Joe Meade, signalled his intention to write to the Minister for Finance to request that the Financial Services Ombudsman be given legislative authority to name particular institutions when it is in the public interest. I pay tribute to the work of Mr. Joe Meade as the Financial Services Ombudsman. He was a champion of consumer rights and his relaxed style did much to demystify his office and show people there was a redress mechanism. His successor, Bill Prasifka, has continued that trend and repeated the call, during an interview on "Morning Ireland" this morning, for the power to name these institutions.
We need to ensure the public has access to accurate information about how financial service providers are treating customers and how they behave when their shortcomings are pointed out. It is accepted that there is little, if any, public confidence in the Irish financial system at the moment. Deputies and Senators get daily complaints about the manner in which financial institutions are treating their customers, particularly as they pursue loans and debts. While I recognise that a code of conduct exists, this is more often breached than adhered to. Many people feel intimidated and unsure about how to report a breach of that code or how to engage with their bank or financial institution. The way to resolve this is through greater transparency about the performance of individual institutions.
The common themes in respect of the complaints are the sale of commission-driven financial products without regard to their suitability and the treatment of elderly customers, many of whom were sold long-term or high-risk bonds that were completely unsuited to their needs. I wish to highlight the case of a couple in their 70s who had deposited their life savings of €345,000 in one of our banks. In 2005 they were encouraged to put their money in a managed fund to get a better return. In 2008 they were again approached by the bank which advised them of a significant drop in the value of the fund. It was only at this point that they were fully informed about how the investment was managed, in particular that 70% of the initial €345,000 was based on the performance of the stock market. To make matters worse, if they withdrew their money at that stage, they would be hit with a €9,000 penalty. Thankfully the Financial Services Ombudsman found in their favour. However, we cannot name the bank involved under the present regulations.
In July 2011, Mr. Prasifka initiated a round of public consultation on the publication of information on the complaints record of financial service providers. He pointed out that the publication of such information would require an amendment to the legislation. My colleague, Deputy Michael McGrath, published a straightforward Bill in December that would extend the necessary powers to the Financial Services Ombudsman to bring this information into the public domain. For confidence to return to the system, we need to get such information into the public domain. We have submitted the Bill for consideration in the lottery for the Dáil sitting on 2 March. I hope it will be selected for debate and that the Minister will consider supporting it.