I move: "That the Bill be now read a Second Time."
Caithfidh mé a rá go bhfuil áthas orm a bheith ag cur an Bhille seo chun tosaigh, Bille atá scríofa agam ó bhí 2014 ann. Ba mhaith mo bhuíochas a ghabháil le Free Legal Advice Centres, FLAC, go háirithe Paul Joyce a bhí ag obair liom ar an mBille seo agus a rinne tuairisc in 2014 ar son FLAC dar dteideal Redressing the Imbalance. Léiríonn an tuairisc sin go soiléir na míbhuntáistí atá ann ó thaobh na rialacha nuair a bhíonn gnáthdhaoine ag déileáil le hinstitiúidí móra airgeadais.
I am very glad to move Second Stage of this Bill. It has been drafted since 2014 and deals with an issue I have raised with the Government on numerous occasions, that of the need to change certain sections of the Ombudsman Act which would allow with respect to products that were mis-sold to customers more than six years ago for redress to be able to be sought outside that timeframe. It is unfortunate we have not had redress of that issue up to now with the bringing forward of this Bill, although I acknowledge the Government issued a press release drawing attention to the heads of a Bill that would bring this provision into being whenever that Bill would be passed by both Houses of the Oireachtas.
I commend the work of the Free Legal Advice Centres, FLAC, and in particular Paul Joyce, in working on the 2014 FLAC report, Redressing the Imbalance. It is an excellent piece of work that shines a light on just how imbalanced and unfair many of the rules are and how much they are tilted in favour of the banks and financial institutions over the customers. That report made many recommendations. Some of them would need to be addressed at European level and others are matters of policy or regulation, whether it be for the Ombudsman or other institutions. The report also pointed out many actions we as Members of the Oireachtas could and should take to help level the playing field. In that spirit I was happy originally to publish this legislation in 2014 and to bring it to Second Stage today. I signalled from the start my willingness to engage with all parties and with the Government to make sure as many of that report's recommendations as possible are made part of the law of the land.
I thank the Financial Services Ombudsman for his and his office’s engagement with me on this Bill. He has given of his time, and he allowed his deputy to make his time available to me, and he also attended the briefing session we had yesterday. I also acknowledge that the Financial Services Ombudsman has in recent years started to live up to the potential of the office, which is now a valuable element of the consumer protection armoury of this State. I could probably not have said that a few years ago because the full potential of that office was not being reached. There has been a marked shift in recent times. It is right for people like me who have criticised that organisation in the past to acknowledge the improvements we are seeing.
To say the relationship between the Irish people and their banks during recent years has been fraught would be an understatement of massive proportions. We all know that the banks have cost the Irish people billions of euro and that they are still not playing the role in the economy they should be playing. That is largely a debate for another day but the fact remains, and is worth stating, that the banks’ behaviour caused an unprecedented crash exposing the weak foundations on which this economy was built. If we think back to that behaviour which came to the fore in 2008 and 2009, behaviour that is still being investigated by arms of this State today and rightly so, and applied the same rules that apply for individuals seeking redress for a breach of their rights from the same institutions, then under the current rules there would be no investigation. The doors would be shut because it happened more than six years ago.
That issue goes to the core aim of this measure. This Bill, if passed, would remove the blanket ban on a consumer seeking redress for a breach of his or her rights by a financial institution if that breach occurred more than six years ago. Instead the law would be changed so a consumer would have full access to the Financial Services Ombudsman and legal routes if he or she seeks redress within two years of becoming aware of the breach. This is not an academic argument but one of real concern. We all know of cases of people being sold endowment mortgages only to find out many years later that what they were promised never materialised. Losses of €30,000, €40,000 and up to €100,000 have been reported in the media in the past. We all know about the scandal associated with payment protection insurance. We also all know about individuals being moved from tracker rate mortgages onto variable rate mortgages against the terms and conditions of their original mortgages. If those products were sold more than six years ago, customers have no avenue to seek redress with respect to the mis-sold product from the financial institution.
As we speak, the Central Bank is supervising the main banks as they go through their records to see how many families and individuals were moved off tracker mortgages over the last number of years. Unless we bring in this change, many of those families could be left legally stranded - in the right but with no redress available to them because the product was sold to them more than six years ago. I hope all sides of this House can unite behind this issue and get it sorted once and for all. I acknowledge that the Minister in the Government's press release yesterday drew attention to the heads of a Bill, a section of which would deal with that area, and that is to be welcomed. It is appropriate to acknowledge that. The irony of it is that next week's lottery has selected a Bill drafted by Deputy Michael McGrath, which also seeks to achieve the same purposes. I believe this is an issue on which we are united. It is pity it has taken a number of years to progress this Bill and that it is more likely it will be enacted in 2017 as opposed to 2014, when it was originally drafted.
I wish briefly to go through a number of other changes. Section 2 seeks a redefinition of "consumer" so that it is in line with the consumer protection code and the Consumer Credit Act. As it currently stands, it has been argued that by defining a consumer as including a company with a turnover of less than €3 million, the possibility exists that the role of the Financial Services Ombudsman in standing up for the small individual might be diluted by larger groups using up many of the limited resources of the office. For example, the 2014 FLAC report advises of cases where the Commercial Court would have offered the more natural environment but the definition of consumer currently applying allowed a process such as in the Lyons case where businesses with loans of millions of euro were availing of the Financial Services Ombudsman process. That is not what that Financial Services Ombudsman is there for. I cite the example of a credit union that was given previously, which was perhaps given dodgy legal or financial advice, and which could apply to the Financial Services Ombudsman for redress. It is not supposed to be like that; rather it is supposed to be there for individual consumers. There may be a case, and this should be dealt with in greater detail on Committee Stage, for taking a longer-term view of whether a two-tiered approach for individuals and businesses may be envisaged.
Section 3 removes the words "in an informal manner" and "without regard to technicality and legal form".
I have engaged with the Financial Services Ombudsman about this on numerous occasions. I am aware that this section may be sharpened up on Committee Stage to achieve the desired aim of allowing the Financial Services Ombudsman to be open to all, on one hand, and to stand up to scrutiny in a formal legal setting, on the other. This deletion should not be interpreted as forcing the ombudsman to act in a more formal manner. We all know that the fact the ombudsman's office can act in an informal manner is one of its attractions. I encourage people to submit letters in their own words to the Financial Services Ombudsman. They do not have to be overly formal. It needs to be kept that way. Given the decisions that are being made, there has to be due regard to the legal form and technicality.
Section 4 is the meat and veg of this Bill. It is an amendment to the statute of limitations in these matters so that there will no longer be a blanket ban on complaints after six years have elapsed.
Section 5 seeks to make mediation the norm in disputes. Specifically, it tries to compel financial institutions to enter into mediation. It requests that where a financial institution refuses to enter into mediation it has to submit a valid or justifiable reason for not doing so to the Financial Services Ombudsman. It is appropriate to recognise the good work of the Financial Services Ombudsman's office. It is welcome that mediation has now become far more the norm and financial institutions have been persuaded more and more to engage in it. There is no guarantee it will continue to be the norm. For those who still do not engage in that form of mediation, we are saying that they need to give a reason why they have decided not to do so. It should be enshrined as the best way of solving disputes. The amendment would place pressure on banks and financial institutions to engage in mediation. I welcome that this is happening more often but current form is no guarantee of future behaviour.
Section 6 appears to be a technical section but is quite important. By allowing the Financial Services Ombudsman more scope to better report on his findings, we can give a more accurate picture. Currently the Financial Services Ombudsman must report cases as upheld, partly upheld and not upheld. There are three categories. Such a limited range of options can give misleading statistics. In many cases "partly upheld" was from a consumer's point of view a largely irrelevant finding that did not reflect how they felt. It was as if one was right on a technicality but wrong in the substance of one's complaint or appeal. If it was deemed partially upheld, it seemed as if it was a positive for the consumer when, in reality, it was largely negative. The solution for a better and more accurate understanding of how the results of the process are really panning out is to allow a wider range of reported findings. The finding of "substantially upheld" or "substantially rejected" should be added instead of the sometimes misleading finding of "partly upheld". This would have to be followed through on the amendment in 2013 that provided for the "name and shame" power the ombudsman now has.
Sections 7 and 8 are among the most important in the Bill. While I fully respect the autonomy and role of the Financial Services Ombudsman, the option for a citizen to access the courts must also be fully respected. In an ideal world, the Financial Services Ombudsman process would end in each case with satisfied parties accepting the decision. We do not live in an ideal world. We will never have that perfect situation and so we must always protect the right of all to access the courts system in a way that is affordable. That means allowing a right of appeal to the Circuit Court. Currently, the right of appeal is to the High Court and this has two effects. The first is that the costs are significantly higher than they would be in the Circuit Court, which means it is outside the reach of many consumers. Second, the appeal to the High Court can only be made on a matter of law as opposed to there being a full rehearing. Taken together, these two facts mean an appeal to the High Court is not a realistic option for many. Therefore, it closes the avenues of justice for many consumers. There are arguments as to why the current process protects the consumer but, as I have argued in other debates about the right to access the courts, the overriding principle must be that the consumer can, if he or she chooses, have his or her day in court. It should not be lost in the wider debate that the other element of this section is to extend the time a consumer or financial institution has to appeal to 60 days instead of the current 21. This is an important amendment which, like the other sections of the Bill, will empower the consumer and was one of the overarching goals of FLAC's 2014 report, to redress the imbalance and level the playing field for the small person. If one thinks about it, a person makes his or her complaint to the ombudsman in an informal manner. The ombudsman rules against him or her to the effect that he or she does not have a valid complaint but the person feels that it is valid. He or she must now to appeal to the High Court. We would like it changed to the Circuit Court. The person is given 21 days and in that time, he or she will have to decide if he or she should go to the Circuit Court and weigh up the options. Costs could be awarded against him or her. He or she would have to get legal representation. He or she would have to brief his or her legal representatives, who must then file the appeal. There is simply not enough time in that tight window. We are of the view that 60 days would be more appropriate.
I hope all parties and Independents can support the Bill. I have indicated there are sections in the Bill that will benefit from a full and open debate and I look forward to hearing the view of colleagues and Ministers. I have already acknowledged that similar proposals have come from Deputy Michael McGrath and that he has penned legislation on the matter. The Minister, Deputy Noonan, and Minister of State, Deputy Eoghan Murphy, highlighted yesterday in a press release that they will deal with this issue. I am aware there is legislation regarding the eventual amalgamation of the Pensions Ombudsman and the Financial Services Ombudsman. There is no date yet for that Bill and I see no reason why consumers should have to wait until then to have these issues dealt with. The whole purpose is to make sure that time cannot run out for many. It is crucial that we amend the statute of limitations. We have been out of synch with international norms for many years. It is three years since the Minister became aware of the mis-sold products issue. Hundreds and possibly thousands of people have been denied access to justice because of a very flawed piece of legislation a number of years ago. That can be redressed and hopefully it will be. This debate should act as an impetus for that.