Amendment No. 1 arises out of committee proceedings. Amendments Nos. 1, 2 and 7 to 10a, inclusive, are related. Amendment No. 2 is a physical alternative to amendment No. 1, amendment No. 8 is a physical alternative to amendment No. 7 and amendment No. 10a is a physical alternative to amendment No. 10. Amendments Nos. 1, 2 and 7 to 10a, inclusive, may be discussed together.
Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014: Report and Final Stages
I move amendment No. 1:
In page 3, between lines 14 and 15, to insert the following:
“Amendment of section 57BA of Principal Act
2. Section 57BA of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by inserting the following after the definition of “investigation”:
“ ‘long-term financial service’ means a financial service where the actual or intended duration of the service is 5 years and one month, or more, and is not subject to--
(a) an annual renewal, or
(b) a right to unilateral cancellation by either party,
prior to the expiry of the actual or intended duration;”.”.
These amendments to section 3 of Deputy Pearse Doherty's Bill, as amended on Committee Stage, deal with the time limit to make complaints to the Financial Services Ombudsman and the necessary definition of "long-term financial service". As the Minister, Deputy Noonan, stated on Committee Stage, the heads of the Government's Bill, published last September, provide for a possible three-year discoverability period for complaints in respect of long-term services. This is now reflected in section 51 of the Government's Bill, which was published a couple of weeks ago. In that respect, the extension of the time limits as proposed by section 3 of the Deputy's Bill and related amendments are to be welcomed in principle.
The Deputy's amendments Nos. 8 and 9 seek to remedy some of the issues that the Minister highlighted on Committee Stage, such as the inclusion of the standard objective test for the date of knowledge, and discretion is provided to the ombudsman to allow for a longer period where it would be just and equitable, similar to section 51(2)(iii) of the Government's Bill.
However, I still have some difficulties with a number of the Deputy's proposed amendments. The definition of "long-term financial service" as set out in amendment No. 2 is not satisfactory because it could include a wide range of policies or services that are subject to annual renewal or could be cancelled unilaterally by the financial services provider.
In effect, it will change products which are short-term financial service products, such as house insurance and potentially travel insurance, into long-term products on a par with life assurance and pensions. I am especially concerned that the impact of this very wide definition of long-term financial service could increase the cost of policies such as car insurance or home insurance for customers because insurance companies would have to be mindful of the possibility of claims being taken in a longer timeframe, and they would accordingly pass the administrative cost of keeping records for longer periods on to customers. Additionally, they could refuse to cover customers up to a five-year period or increase annual premiums substantially after a five-year period to deter them from becoming long-term customers under Deputy Doherty's definition. This would have a negative impact on customers.
Due to the concerns that the Deputy's definition of long-term financial services in amendment No. 2 could increase the cost of insurance and other annual policies, I will be pressing amendment No. 1 in regard to the definition of "long-term financial service". In amendment No. 1, I have provided a definition of "long-term financial service" as meaning a financial service where the actual or intended duration of the service is five years and one month, or more, and is not subject to annual renewal, or a right to unilateral cancellation by either party. This is intended to include policies like mortgages, long-term loans and so on.
Second, while I agree with the intention behind the Deputy's amendments Nos. 8 and 9, which would bring the time limits more in line with section 51 of the Government's Bill, I am afraid that the technical drafting of the amendments on the new time limits for complaints is not correct, given the current wording of section 57BX of Part VIIB of the Central Bank Act 1942. However, if Deputy Doherty was agreeable, I think the Minister's amendment No. 7 achieves what the Deputy seeks to achieve, which is the extension of the time limits for a possible further period of three years, based on the date of knowledge of the conduct, or when it ought to have been known, and the discretion of the ombudsman to extend the time period for complaints where this is just and equitable. For these reasons, I am pressing my amendments Nos. 1 and 7 in regard to the amendment of section 57BX of the Central Bank Act 1942 to achieve the extension of the time limits that both sides agreed to in principle, with the exception of the details of the definition of "long-term financial service". Therefore, I am opposing the Deputy's amendments Nos. 2, 8 and 9.
In regard to Deputy Doherty's amendments Nos. 10 or 10a, I can see what he is seeking to achieve, which is to put beyond any doubt that the ombudsman can investigate complaints made before the extension to the time limits but which had not been assessed, and to allow complaints that were refused as being outside the then applicable time limits and which have been resubmitted to the ombudsman because they could now possibly qualify under the new extended time limits. However, if the Deputy accepts amendment No. 7 to achieve his desired aims of extending the time limit and if he is pressing his amendment No. 10, then the numbering referred to within amendment No. 10 may need to change, and I see that he has submitted an amendment No. 10a to rectify this. The numbering of my amendment No. 7 will also need to change and I can outline the changes that need to be made to my amendment No. 7 to take account of the acceptance of amendment No. 10 on the Final Stage.
I am very glad the Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014 is on Report Stage and, hopefully, it will pass Final Stage in the Dáil tonight. I welcome the engagement that I and Declan O'Farrell in my office have had with the Minister of State and his officials in regard to preparing for Report Stage. A number of amendments are grouped in this section. Amendments Nos. 1 and 2, to which the Minister of State referred, demonstrate a very clear and intentional difference in terms of the definition of long-term services, and I will come back to that point. The other amendments that are grouped are amendments Nos. 7 to 9, inclusive. Amendment No. 7 is a Government amendment which does exactly what amendments Nos. 8 and 9 do and is just a differently drafted version. I understand that both versions are acceptable. However, I have no problem in accepting Government amendment No. 7 and, therefore, in withdrawing amendments Nos. 8 and 9.
Amendment No. 10 and the amendment to that amendment, amendment No. 10a, are sequencing amendments. Amendment No. 10a is crucial, in my view, because it allows for dealing with the issue of those who have been locked out of the system heretofore because of the six-year rule but who, once this legislation passes into law, can apply to the ombudsman to have their cases heard for the first time, subject to the other provisions within the legislation. I believe that is crucial and it points to the immediate impact this legislation will have. Between 2011 and 2015 some 3,003 cases were rejected by the Financial Services Ombudsman because of the six-year rule. With the lifting of this rule many, if not all, of those could potentially be resubmitted to be heard. It also ensures that those within the process will not fall out of the process. Therefore, I reiterate the need to ensure those amendments are taken.
To return to the core issue of the definition of a long-term financial service, what the Government is proposing is based on a very restricted view of what is a long-term financial service. While it is welcome that we are getting rid of the six-year rule, and I want to acknowledge the legislative work Deputy Michael McGrath has done on this previously, we have to ensure this can apply in the broadest way possible, while not being overly burdensome on insurers or financial services providers. Our amendment is tabled in a way that I believe meets that need. It ensures the service has to be of a duration of five years and one month or more. If it is cancelled or has expired more than six years previously, it falls out of the provision in terms of being able to take a case to the ombudsman after the six years.
What the Government is trying to do is limit this provision to products that are not annually renewable or not subject to unilateral cancellation by either party. In that instance, many individuals will not be able to have recourse to the Financial Services Ombudsman. I have mentioned, for example, the PPI scandal, whereby we have seen tens of millions of euro paid out. I believe there are many thousands more who have not come under the radar of the Central Bank and we are engaging constructively with the Central Bank in that regard.
There is also the situation of somebody who was simply sold house insurance a number of years ago. As people do, the customer gets the premium and, as it is an annually renewable product, under the Government's definition there would be no change to the law in regard to making a complaint. Year on year, people just pays the premium until the house burns down or is flooded. When they then check the contract they find out they were mis-sold the product. Are we to stand here knowing that these cases arise and say we are sorry but, as it is an annually renewable service, it is not a long-term service and there was only six years within which to make a complaint? Instead, what we are doing here is introducing a period of three years from the moment the person found out, or ought to have known, that the conduct arose.
The Minister of State talks about the overly burdensome nature of this change and about increased premiums. I do not believe that. While I do not doubt that insurance companies will make that claim, let us remember what is happening here. Insurance companies, whether for house insurance, PPI or car insurance, have to hold on to people's records. At this point in time, under law, up to six years after the contract has expired I or anybody else can take a claim to the Financial Services Ombudsman in regard to the product that was sold. The companies are holding to the records currently for a duration of six years after the contract. What this does is to mandate them not to delete or get rid of the documentation until six years after the product has expired. I cannot see how that would incur additional administration costs. We are not thinking about insurance companies that are shuffling boxes out to storage units on the M50. This is all being held in the cloud and the only additional costs would be in regard to cloud space. I cannot agree with the Minister of State that this would actually increase costs.
Let us remember what we are doing here. Not to have the definition I have proposed in section 2 would mean that financial services providers who wronged their customers would be able to evade the grip of the Financial Services Ombudsman and, therefore, not have to redress the wrongful action or compensate the consumer because of this type of technicality. I will be pressing amendment No. 2 and I believe Government amendment No. 1 should be rejected.
We have discussed this in and out privately. It is a policy choice. There is nothing in terms of the wording or drafting to my knowledge. It is a policy choice as to whether the Minister of State wants to limit this. My amendment does not state that all financial services are long-term financial services; indeed they are not. These services are only services that have a duration of five years and one month or more. The product has to have been sold after 2002 and if it has been cancelled or expired for more than six years, it does not come under the further sections of the Bill.
I welcome that Deputy Pearse Doherty's Bill has reached Report Stage and commend him in that respect.
There is general consensus in the House that the kernel of the Bill, the six-year rule, needs to be addressed. There have been a number of pieces of legislation at various stages of the system in an effort to tackle that issue and I hope we can reach an agreement as to how to do it. The reality is that many thousands of financial services consumers are potentially affected by this issue.
I ask the Minister of State to clarify where this Bill sits in relation to the Government Bill. We seem to have this parallel discussion on an ongoing basis, with Second Stage of the Government Bill being taken on Thursday. The Government Bill is a much longer Bill and deals with a number of wider issues as well as this issue. If this Bill is enacted before the Government Bill, will the Government Bill supersede this Bill if it becomes an Act? Will this Bill be repealed by the enactment of the Government Bill? How will it work in practice if Deputy Doherty's Bill is enacted first and followed shortly afterwards by the Government Bill being enacted? Where will the two sit legally side-by-side?
On the issue of the definition of a long-term financial service, I fully understand that a financial service product that is subject to an annual renewal is not a long-term financial product. That is based on common sense. My issue with the Government's amendment No. 1 is that if the financial service product contains a right to unilateral cancellation by either party, prior to the expiry of the actual or intended duration, in effect, under the Government's definition, it does not constitute a long-term financial service product.
My understanding of a long-term financial product would be along the lines of a pension, mortgage, life assurance policy, life insurance policy or long-term investment product. In the past we have raised issues related to whole-of-life insurance policies and payment protection policies, which Deputy Doherty mentioned. My view on amendment No. 1 is that I accept that if a product has an annual renewal, it is not a long-term product. However, just because a product has a clause in it that the financial service provider can cancel it does not mean it is not a long-term financial service product. I am not a legal expert, but I imagine that if one went into the minutia of the terms and conditions of most of the types of product I mentioned, there would be some get-out clause for the financial services firm. I hope the Minister of State can address that issue. My instinct is that I would not agree with the Government's provision in amendment No. 1 that if it contains a clause for unilateral cancellation, it is not a long-term product.
The nub of the issue relates to amendment No. 7, which Deputy Doherty is inclined to accept. This amendment would replace the existing six-year rule. I just went through some examples in my own mind. Looking back at the payment protection insurance situation, 83,500 customers gained recourse following the Central Bank investigation, involving refunds of over €71 million, but of course it only related to customers who had taken out their policy since 1 July 2007 from 11 different credit institutions.
In a scenario where somebody took out their product prior to 1 July 2007, but only became aware of it in 2013, it could be argued that they are not covered by the Bill. However, there is the provision for the ombudsman to take a longer view of it provided the subsection (3D) provision that "the conduct complained of occurred during or after 2002" is relevant and that "that the long-term financial service concerned has not expired or otherwise been terminated more than 6 years before the date of the complaint". Taking the example I cited, if somebody had bought a PPI policy prior to 1 July 2007 and became aware of a problem in 2013, then at the discretion of the Financial Services Ombudsman, that complaint could now be taken. I ask the Minister of State to clarify that my interpretation of it is correct in that regard.
I welcome this discussion and I hope we can reach agreement on the key issues involved in the Bill over which I believe there is wide agreement. We are down to the finer details of this, which are important. Tens of thousands of customers have been denied justice by virtue of the six-year rule, which I know was caught up in a wider Statute of Limitations scenario. The Government has said for some time that it is willing to review this - here we are now and I hope we can get the job done. I would appreciate a response to those issues.
I acknowledge the important work of Deputy Pearse Doherty on this Bill and the work that Deputies Doherty and Michael McGrath, and the Minister, Deputy Noonan, did on Committee Stage. It is very important work and it is important that we have reached Report Stage. It is also important for us to distinguish between long-term and short-term financial services. In looking at long-term financial services, we must extend the time limits for recourse for customers who find a wrong done against them and they can then report that to the ombudsman. That is an important aspect in this Bill. The Government believes Deputy Doherty's amendment is too wide-ranging because it essentially captures what are short-term financial services, which could have a negative impact on the price of these financial services that are renewed on an annual basis.
I accept what Deputy McGrath said about the phrase "not subject to...a right to unilateral cancellation by either party". This was intended to cover the situation with income protection policies. We intended to count income protection policies as long-term financial services. Those policies contain a standard clause that prevents a financial service provider from cancelling such a policy unilaterally. However, it has come to my attention more recently that the Office of the Attorney General may need to look at this again in advance of the Bill being taken in the Seanad to ensure that the current wording is not open an unintended interpretation.
Deputy McGrath asked what will happen when the Government's Bill is enacted. Essentially, it will repeal that part of the Central Bank Act. If, for example, Deputy Doherty's Bill is enacted for a period of three months, it will fall away and the Government's Bill will become the legislation, but any cases that are taken in that three-month period will be taken based on the legislation as enacted, that is Deputy Doherty's Bill. The Government's intention was to try to have its Bill enacted before Deputy Doherty's. However, as it is more wide-ranging and comprehensive, that may not be the case. As I think the Minister, Deputy Noonan, may have explained on Committee Stage, we proceed now with Deputy Doherty's Bill. If that comes on to the Statute Book before the Government's Bill, that will be the law until the Government's Bill then replaces it.
It is the Government's intention to press amendment No. 1.
I welcome that clarification. If anything I think my legislation has acted as a prompt for the Government. This Bill was first published in 2014. As it passed Second Stage, the Government produced the heads of its Bill. As it passed Committee Stage, the Government published its legislation. Hopefully as it passes Report and Final Stages in the Dáil tonight, the Government's Bill will then come to Second Stage. If we keep on going, we might get the Government's legislation across the line.
We have tried to ensure here that the thought process in the Government's legislation and our legislation are exactly the same so that it is a seamless process.
My big concern, as I said on Committee Stage, is when the Government's legislation will become law. I welcome the fact that the provisions we outlined in our 2004 Bill, which we are discussing tonight, are being incorporated into the legislation.
There is disagreement on the definition of long-term financial services. I agree with Deputy Michael McGrath that a long-term financial service is one that is long term so therefore it does not include motor insurance. However, that is not what we are dealing with here, which is the mis-selling of products to consumers and whether the rules are too rigid. The argument is that if I took out car insurance in 2007 or 2013 and had it for a year, but found out ten years later that it was mis-sold, should I have the right to make a complaint because of the new rules which specify three years from the time I became aware of the misconduct? The argument is that I should not. Therefore, we created a definition of a long-term financial service which states it is a service of a duration of five years and one month or more, but it cannot have been cancelled within six years. On the passage of this legislation, many thousands of people will be able to resubmit their complaints to the Financial Services Ombudsman and have them heard. Deputy Michael McGrath's example of somebody being outside the scope of the Bill is correct unless the individual made a complaint to the Financial Services Ombudsman during that period and, therefore, could automatically have her or his complaint heard. If one limits the definition, however, one will limit the number of people who can access redress and compensation, have the Financial Services Ombudsman’s office adjudicate on that issue and, if there is a wrong, have it put right. I will press amendment No. 2. There is a difference here and at this stage I do not think we will reconcile it.
On the wider issue first, namely, the sequencing of the Bills, I wish to be reassured that it will be a seamless process and that we will not have customers facing one set of terms in relation to accessing the Financial Services Ombudsman for a period of months and then another set of terms when the Government legislation is finally enacted. I know it is a matter for the House to be consistent in how it legislates, but we must ensure that the conditions of access to the Financial Services Ombudsman are consistent. That is very important and that is why it is crucial we tease this out now and reach agreement or vote on it, so that we can dispose of the issue and are then consistent in the treatment of this issue when the Government Bill is being debated.
In his initial remarks, the Minister of State seemed to suggest that home or travel insurance could potentially be regarded as a long-term financial service product. I do not see how that could be the case. They are categorically subject to an annual renewal so I do not quite understand the point he made. It is pretty clear to me what a long-term financial service product is and it includes income protection, payment protection policies, life assurance and life insurance, pensions, long-term investments, mortgages and so on, but it does not include any form of home insurance, car insurance, travel insurance or anything like that. I am not convinced by the Minister of State's argument that omitting the provision on the right to unilateral cancellation brings into the net a much wider set of products that we do not intend to include. I do not get that point so perhaps the Minister of State will elaborate on it.
To go back to an earlier query raised by Deputy Michael McGrath about his interpretation in relation to payment protection insurance and the example he gave, his interpretation was correct, bearing in mind the long stop back to 2002.
In response to his point in relation to consistency between the enactment of Deputy Doherty's Bill and the Government’s Bill, I agree that we must take a consistent approach. That is the reason I flagged in an earlier contribution that we would need to look again at amendment No. 1 and consult with the Attorney General to make sure there cannot be an interpretation of the amendment that was not intended. Our fear is that Deputy Doherty's amendment No. 2 is too wide ranging and that it would capture financial service products that are renewed on an annual basis, and if that if they went beyond the five year and one month period they would then be treated as a long-term financial service, which would not be acceptable as we believe we must make the distinction between short-term and long-term financial service products.
The point about unilateral cancellation is the part of our amendment on which we need to seek clarity before we deal with the Bill in the Seanad.
Amendment put:
The Dáil divided: Tá, 31; Níl, 59; Staon, 0.
Tá
- Barrett, Seán.
- Breen, Pat.
- Brophy, Colm.
- Bruton, Richard.
- Burke, Peter.
- Byrne, Catherine.
- Canney, Seán.
- Carey, Joe.
- Daly, Jim.
- Deering, Pat.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Heydon, Martin.
- Kehoe, Paul.
- Kyne, Seán.
- McEntee, Helen.
- McLoughlin, Tony.
- Madigan, Josepha.
- Murphy, Dara.
- Murphy, Eoghan.
- Naughten, Denis.
- Neville, Tom.
- O'Dowd, Fergus.
- Phelan, John Paul.
- Ring, Michael.
- Rock, Noel.
- Stanton, David.
Níl
- Adams, Gerry.
- Aylward, Bobby.
- Brady, John.
- Brassil, John.
- Breathnach, Declan.
- Browne, James.
- Buckley, Pat.
- Butler, Mary.
- Byrne, Thomas.
- Cahill, Jackie.
- Calleary, Dara.
- Casey, Pat.
- Collins, Joan.
- Collins, Michael.
- Collins, Niall.
- Connolly, Catherine.
- Cullinane, David.
- Curran, John.
- Doherty, Pearse.
- Donnelly, Stephen S.
- Ellis, Dessie.
- Ferris, Martin.
- Funchion, Kathleen.
- Harty, Michael.
- Haughey, Seán.
- Healy-Rae, Danny.
- Healy, Seamus.
- Kelleher, Billy.
- Kenny, Martin.
- Lawless, James.
- MacSharry, Marc.
- McGrath, Mattie.
- McGrath, Michael.
- Martin, Catherine.
- Mitchell, Denise.
- Moynihan, Aindrias.
- Moynihan, Michael.
- Munster, Imelda.
- Murphy O'Mahony, Margaret.
- Murphy, Eugene.
- Nolan, Carol.
- Ó Broin, Eoin.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Laoghaire, Donnchadh.
- Ó Snodaigh, Aengus.
- O'Brien, Darragh.
- O'Brien, Jonathan.
- O'Callaghan, Jim.
- O'Keeffe, Kevin.
- O'Reilly, Louise.
- O'Rourke, Frank.
- Pringle, Thomas.
- Quinlivan, Maurice.
- Rabbitte, Anne.
- Scanlon, Eamon.
- Smith, Bríd.
- Tóibín, Peadar.
- Troy, Robert.
Staon
Tellers: Tá, Deputies Tony McLoughlin and Joe Carey; Níl, Deputies Aengus Ó Snodaigh and Denise Mitchell.
Amendment declared lost.
I move amendment No. 2:
In page 3, between lines 14 and 15, to insert the following:
"Amendment of section 57BA of PART VIIB of the Principal Act
2. Section 57BA of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by the insertion of the following definition:
" 'long-term financial service' means a financial service where the actual or intended duration of the service is 5 years and one month or more;".".
Amendment put:
The Dáil divided: Tá, 59; Níl, 32; Staon, 0.
Tá
- Adams, Gerry.
- Aylward, Bobby.
- Brady, John.
- Brassil, John.
- Breathnach, Declan.
- Browne, James.
- Buckley, Pat.
- Butler, Mary.
- Byrne, Thomas.
- Cahill, Jackie.
- Calleary, Dara.
- Casey, Pat.
- Collins, Joan.
- Collins, Michael.
- Collins, Niall.
- Connolly, Catherine.
- Cullinane, David.
- Curran, John.
- Doherty, Pearse.
- Donnelly, Stephen S.
- Ellis, Dessie.
- Ferris, Martin.
- Funchion, Kathleen.
- Harty, Michael.
- Haughey, Seán.
- Healy-Rae, Danny.
- Healy, Seamus.
- Kelleher, Billy.
- Kenny, Martin.
- Lawless, James.
- MacSharry, Marc.
- McGrath, Mattie.
- McGrath, Michael.
- Martin, Catherine.
- Mitchell, Denise.
- Moynihan, Aindrias.
- Moynihan, Michael.
- Munster, Imelda.
- Murphy O'Mahony, Margaret.
- Murphy, Eugene.
- Nolan, Carol.
- Ó Broin, Eoin.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Laoghaire, Donnchadh.
- Ó Snodaigh, Aengus.
- O'Brien, Darragh.
- O'Brien, Jonathan.
- O'Callaghan, Jim.
- O'Keeffe, Kevin.
- O'Reilly, Louise.
- O'Rourke, Frank.
- Pringle, Thomas.
- Quinlivan, Maurice.
- Rabbitte, Anne.
- Scanlon, Eamon.
- Smith, Bríd.
- Smyth, Niamh.
- Tóibín, Peadar.
Níl
- Barrett, Seán.
- Breen, Pat.
- Brophy, Colm.
- Bruton, Richard.
- Burke, Peter.
- Byrne, Catherine.
- Canney, Seán.
- Cannon, Ciarán.
- Carey, Joe.
- Daly, Jim.
- Deering, Pat.
- Doyle, Andrew.
- Durkan, Bernard J.
- Farrell, Alan.
- Fitzgerald, Frances.
- Fitzpatrick, Peter.
- Flanagan, Charles.
- Heydon, Martin.
- Kehoe, Paul.
- Kyne, Seán.
- McEntee, Helen.
- McLoughlin, Tony.
- Madigan, Josepha.
- Murphy, Dara.
- Murphy, Eoghan.
- Naughten, Denis.
- Neville, Tom.
- O'Dowd, Fergus.
- Phelan, John Paul.
- Ring, Michael.
- Rock, Noel.
- Stanton, David.
Staon
Tellers: Tá, Deputies Aengus Ó Snodaigh and Denise Mitchell; Níl, Deputies Tony McLoughlin and Joe Carey.
Amendment declared carried.
Amendments Nos. 3 and 4 are related and may be discussed together by agreement.
I move amendment No. 3:
In page 3, lines 16 and 17, to delete "Amendment of section 57BK of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004.), in subsection (4)" and substitute "Subsection (4)".
These are technical drafting amendments to section 2 of the Bill to remove some superfluous words at the start of the section, and also quotation marks, which on the advice of the Parliamentary Counsel will not affect the meaning of the section. I agree with the section as it replicates section 12(11) of the Government's Bill which allows the Ombudsman to act in an informal manner without undue regard to legal form.
I accept amendments Nos. 3 and 4. They are technical and I am glad they clear up the section. There was a lot of discussion at prelegislative scrutiny stage and on Committee Stage. We have reached a good compromise.
I agree with the amendments.
Amendment agreed to.
I move amendment No. 4:
In page 3, line 18, to delete “ “adding” and substitute “adding”.
Amendment agreed to.
Amendments Nos. 5, 6, 12 to 15, inclusive, and 18 are related and may be discussed together.
I move amendment No. 5:
In page 3, between lines 19 and 20, to insert the following:
“Amendment of section 57BS of Principal Act
3. Section 57BS of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting “upheld or substantially upheld” for “substantiated or partly substantiated” in each place where it occurs in subsections (5), (6)(c) and (9).”.
Deputy Doherty has made similar amendments with amendment No. 6 and the necessary consequential amendments Nos. 14, 15 and 18 and I accept them. The Deputy has opted for a full restatement of some of the subsections in the 1942 Act but the effect is the same and I will not press the Minister's amendments Nos. 5 and 13. My amendment No. 12 is a purely technical drafting amendment to remove superfluous wording referring to part of the principal Act on the advice of the Parliamentary Counsel. Other steps have been taken in the Government's Bill, which was published on 12 May, to improve transparency and reporting, including the introduction of preliminary decisions, the publication of decisions on financial services complaints and more transparent information in the annual report and all investigations, including those terminated and settled.
This group of amendments follows the changes we made in the legislation so that four different findings can be made by the Financial Services Ombudsman, which will give greater clarity to consumers and in terms of reporting. There are mirror amendments in my name on the same issue and it is a matter of drafting. The Government is accepting two of those amendments and my amendment No. 18 is identical, so it will be moved by both myself and the Minister.
We support this group of amendments and welcome the clarity given to the nature of the findings that can be made by the ombudsman.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In page 3, between lines 19 and 20, to insert the following:
“Amendment of section 57BS of PART VIIB of the Principal Act
3. Section 57BS of Part VIIB of the Principal Act (as amended) is amended by the substitution of the following for subsections (5) to (9):
(5) A regulated financial service provider falls within this subsection if, in the preceding financial year, at least 3 complaints relating to the regulated financial service provider which have been made to the Financial Services Ombudsman have been found by that Ombudsman to be upheld or substantially upheld.
(6) The information referred to in subsection (4) is—
(a) the name of the regulated financial service provider, including any trading name (if different),
(b) where applicable, the identity of any group of which the regulated financial service provider is a member, and
(c) the number of complaints found to be upheld or substantially upheld in respect of the regulated financial service provider in the preceding financial year.
(7) For the purposes of the law of defamation the publication of the information referred to in subsection (4) in a report under subsection (1) shall be absolutely privileged.
(8) A report under subsection (1) shall not divulge the identity of any complainant nor shall anything be published in the report which may lead to the identification of any complainant unless the complainant consents in writing.
(9) For the purposes of this section if the regulated financial service provider has appealed against the Financial Services Ombudsman’s finding that a complaint has been found to be upheld or substantially upheld the complaint is to be taken to have been so found only when—
(a) the finding is affirmed (with or without modification) on appeal, or
(b) the appeal is withdrawn, struck out by the High Court or abandoned.”.”.
Amendment agreed to.
I move amendment No. 7:
In page 3, to delete lines 20 to 31, and in page 4, line 1 and substitute the following:
“Amendment of section 57BX of Principal Act
3. (1) Subsection (3) of section 57BX of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting “Subject to subsections (3B) to (3D), a consumer” for “A consumer”.
(2) Section 57BX of the Principal Act is further amended by inserting the following after subsection (3A):
“(3B) Subsection (3)(b) shall not apply to a complaint by a consumer in relation to conduct that relates to a long-term financial service.
(3C) A complaint by a consumer in relation to conduct (the “conduct concerned”) that relates to a long-term financial service shall be made to the Financial Services Ombudsman within whichever of the following periods is the last to expire:
(a) 6 years from the date of the conduct concerned;
(b) 3 years from the earlier of the date on which the person making the complaint became aware, or ought reasonably to have become aware, of the conduct concerned; or
(c) such longer period as the Financial Services Ombudsman may allow where it appears to him or her that there are reasonable grounds for requiring a longer period and that it would be just and equitable, in all the circumstances, to so extend the period, but no complaint in relation to such a service may be made unless
either—
(i) the conditions specified in subsection (3D) are satisfied, or
(ii) the Financial Services Ombudsman has allowed a longer period under paragraph (c).
(3D) The conditions referred to in subsection (3C)(i) are that the long-term financial service concerned has not expired or otherwise been terminated more than 6 years before the date of the complaint, and the conduct complained of occurred during or after 2002.”.”.
Amendment agreed to.
Amendments Nos. 8 to 10, inclusive, not moved.
I move amendment No. 10a:
In page 4, between lines 1 and 2, to insert the following:
“(3) Section 57BX of PART VIIB of the Principal Act (as inserted by Section 16 of the Act of 2004) is amended by the insertion of the following:
“(3E) The time limits specified in subsection (3C) shall apply to the following:
(a) any complaint received by the Financial Services Ombudsman which had not been assessed as to its suitability for consideration by the Financial Services Ombudsman; and,
+(b) any complaint received by the Financial Services Ombudsman before the coming into force of this subsection that was refused as being outside the applicable time limits in this Act and that has been resubmitted to the Ombudsman on or after the coming into force of this subsection.”.”.
Amendment agreed to.
I move amendment No. 11:
In page 4, to delete lines 2 to 12 and substitute the following:
“Amendment of section 57CA of Principal Act
4. The Principal Act is amended by substituting the following for section 57CA (as inserted by section 16 of the Act of 2004):
“57CA.(1)The Financial Services Ombudsman may, as part of an investigation, in circumstances where he or she deems it appropriate, try to resolve a complaint by mediation.
(2) The Financial Services Ombudsman shall engage with complainants and providers to ensure that the objective of mediation is understood to promote engagement in the mediation process.
(3) Participation in mediation by the parties to a complaint is voluntary, and a party may withdraw at any time.
(4) The Financial Services Ombudsman may, on reasonable grounds, abandon an attempt to resolve a complaint by mediation as he or she considers appropriate.
(5) Evidence of anything said or admitted during a mediation, or an attempted mediation, of a complaint, and any document prepared for the purposes of the mediation, are not admissible—
(a) in any subsequent investigation, under this Part, of the complaint (unless the person who made the admission, or to whom the document relates, consents to its admission), or
(b) in any proceedings before a court or a tribunal in the State.
(6) Where an attempt to resolve a complaint by mediation is unsuccessful, the Financial Services Ombudsman shall—
(a) deal with the complaint by adjudication, and
(b) notify the parties in writing accordingly.”.”.
I propose to replace section 57CA of the Central Bank Act with a text which mirrors the text in section 58 of the Government's Bill on mediation and details how the mediation process will work in complaints cases. The Government supports the voluntary ethos of mediation. It is important to focus on the fact mediation is successful when both parties agree that it is a voluntary process which attempts to resolve a dispute.
I accept the Minister's amendment and the provision that the ombudsman shall engage in mediation is a major step forward. I acknowledge that there have been great moves in that direction by the ombudsman and his office and I hope this section will encourage the progress we have seen in the past short while.
I acknowledge the efforts, as laid out in the latest annual review of the ombudsman, the efforts that are being made to resolve complaints through mediation, which can play an increasing role in ensuring that disputes and complaints are resolved to the satisfaction of both parties. Giving statutory recognition to it is desirable and we support it.
Amendment agreed to.
I move amendment No. 12:
In page 4, lines 14 to 16, to delete all words from and including “Amendment” in line 14 down to and including line 16 and substitute the following:
“(1) Section 57CI of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting the following for subsection (1):”.
Amendment agreed to.
Amendment No. 13 not moved.
I move amendment No. 14:
In page 4, between lines 23 and 24, to insert the following:
“(2) Amendment of section 57CI of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004), in subsection 2 of section 57CI of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004) is amended to be read as follows:
“(2) A complaint may be found to be upheld, substantially upheld or substantially rejected only on one or more of the following grounds:
(a) the conduct complained of was contrary to law;
(b) the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;
(c) although the conduct complained of was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;
(d) the conduct complained of was based wholly or partly on an improper motive, an irrelevant ground or an irrelevant consideration;
(e) the conduct complained of was based wholly or partly on a mistake of law or fact;
(f) an explanation for the conduct complained of was not given when it should have been given;
(g) the conduct complained of was otherwise improper.”.”.
Amendment agreed to.
I move amendment No. 15:
In page 4, between lines 23 and 24, to insert the following:
“(3) Amendment of section 57CI of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004), in subsection 4 of section 57CI of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004) is amended to be read as follows:
“(4) If a complaint is found to be upheld, substantially upheld or substantially rejected, the Financial Services Ombudsman may direct the financial service provider to do one or more of the following:
(a) to review, rectify, mitigate or change the conduct complained of or its consequences;
(b) to provide reasons or explanations for that conduct;
(c) to change a practice relating to that conduct;
(d) to pay an amount of compensation to the complainant for any loss, expense or inconvenience sustained by the complainant as a result of the conduct complained of;
(e) to take any other lawful action.”.”.
Amendment agreed to.
Amendments Nos. 16 and 17 are related and may be discussed together.
I move amendment No. 16:
In page 4, between lines 23 and 24, to insert the following:
“Amendment of section 57CL of Principal Act
6. Section 57CL of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting the following for subsection (3):
“(3) An appeal under this section must be made—
(a) within 30 days of the date of the notification of the decision of the Financial Services Ombudsman, or
(b) within such further period as the High Court may allow.”.”.
I understand that amendments Nos. 16 and 17 concern the time limits to appeal to the High Court. Given the fact the suggested amendment of 30 days from the Government is similar to Deputy Doherty's proposal of 35 days, I have no objections to Deputy Doherty's amendment.
I welcome the Government's decision to withdraw its amendment. This is a step forward. My original Bill, which was published in 2014, suggested a 60-day window and the current rule is 21 days but that timeframe for a consumer to challenge the outcome of a ruling by the Financial Services Ombudsman in the High Court is very limited when one needs junior and senior counsel. The extension to 35 days will be more beneficial to consumers, while acknowledging that the courts can set their own rules. Hopefully, the extension to 35 days will allow more consumers to consider appealing their cases if they believe there is merit in doing so.
We support the amendment of Deputy Doherty. It is a very big decision for a consumer to appeal a decision of the ombudsman top the High Court. Substantial legal costs are involved and consumers do not make the decision lightly. They should have the maximum possible time and the increase to 35 days is welcome to give them a window of opportunity to make what is a serious decision.
Amendment, by leave, withdrawn.
I move amendment No. 17:
In page 4, between lines 23 and 24, to insert the following:
“Amendment of section 57CL of PART VIIB of the Principal Act
6. Subsection (3) of section 57CL of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004) is amended to be read as follows:
“(3) An appeal under this section must be made—
(a) within 35 days of the date of notification of the decision of the Financial Service Ombudsman, or
(b) within such further period as the High Court may allow.”.”.
Amendment agreed to.
I move amendment No. 18:
In page 4, between lines 23 and 24, to insert the following:
“Amendment of section 57CP of Principal Act
7. Section 57CP of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting the following for subsection (2):
“(2) The High Court may not grant an application under subsection (1) unless it is of the opinion that the conduct sought to be restrained is likely to prejudice or negate the effect or implementation of a decision that the Financial Services Ombudsman might make under this Chapter if that Ombudsman were to find the complaint to which the conduct relates is upheld or substantially upheld.”.”.
Amendment agreed to.
Bill reported with amendments.
When is it proposed to take Fifth Stage?
Now.
Is it agreed that Fifth Stage be taken now? Agreed.
Question proposed: "That the Bill do now pass."
In light of the acceptance of amendment No. 10a, I am asking that the House agree to a cross-reference change within amendment No. 7, which we have also agreed. The change is in section 3(1) of the text inserted by amendment No. 7 and is to substitute "Subject to subsections (3B) to (3E)" for "Subject to subsections (3B) to (3D)".
Is the Minister of State asking on Fifth Stage that the qualification be entered prior to agreement on the Bill ?
That is correct.
Is that agreed? Agreed.
I acknowledge the work that officials from the Minister of State's office have put into working with Sinn Féin. I also acknowledge the work done by Declan Farrell of my office in regard to preparing amendments. He should be celebrating the birth of his child a couple of weeks ago and is supposed to be on paternity leave, but he returned to assist in the passage of this legislation. I also acknowledge the role played by the Free Legal Advice Centres, FLAC, in terms of setting the ground for what is contained within this legislation, in particular through its report of several years ago. Credit is also due to the Financial Services Ombudsman for the work done in conjunction with my office in preparation for this legislation. I thank the Minister of State and Deputy Michael McGrath for their support for the legislation.
I commend Deputy Doherty on getting the Bill to this point and on encouraging the Government with its own Bill. Fianna Fáil also tabled a Private Members' Bill on this issue but took the view that, as there were three similar Bills in the system at that time and the Sinn Féin Bill was ahead, we would not pursue our own Bill in the interests of efficiency. I am glad that this Bill has now passed all Stages in Dáil Éireann. I wish it well in its journey through the Seanad and I encourage the Government to accelerate the progression of its own Bill which incorporates the issues in this Bill but also wider issues which are equally important for consumers.
I again acknowledge the work that has been put into this Bill by Deputies Doherty and McGrath and also the co-operative nature in which we approached this Bill both on Committee Stage and this evening.
It is great to see collegiality at work.
Question put and agreed to.
The Dáil adjourned at 9.15 p.m. until 12 noon on Wednesday, 24 May 2017.