Deputy Kirk referred to subprime lending and stress testing and inquired as to how adequately financial institutions were operating in respect of this matter. My information is that they stress test up to 250 points above the ECB level. In terms of the panel's deliberations — I include in this regard the Chairman's point regarding the mortgage issue — we have discussed ad nauseam repossessions, figures relating thereto and other matters. We have used a proportion of our budget for the future to carry out work in respect of the entire mortgage market. We also carried out research on risk, the interaction between consumers and financial institutions and the advice provided by the latter.
With regard to what can be done, the consumer director, Ms Mary O'Dea, is aware of our views on this matter. As a panel, we have considered whether matters might be handled better, via the consumer protection code, in respect of financial institutions which are pushing people into the courts in respect of repossessions. There are obligations on these institutions to have regard to a customer's welfare, consider his or her background and the amount of money available to him or her and provide a product specific to his or her needs. In the light of the consumer protection code, that is what we want them to do. I cannot demand that the Financial Regulator take a certain route. However, members may rest assured that we have highlighted this matter to it on a number of occasions. The Financial Regulator is certainly aware of our views which are not particularly dissimilar to those expressed by members.
Deputy English posed a number of questions. I must first inform him that people do not complain to the panel separately. They can approach the Financial Regulator but if they have an individual complaint, it will be referred to the Financial Services Ombudsman. There is a helpline in place via which a certain amount of information can be provided. People will be asked to again approach the financial institution with which they have their business, deal with the matter of concern to them and return to the ombudsman if difficulties continue to arise.
As a lawyer and someone who has worked in the consumer area, I am aware that consumers usually make one or two complaints but if action is not taken, they will not pursue the matter further. We received a presentation from the Financial Regulator, the figures from which indicate that last year it received over 29,000 calls, 3,500 e-mails and 542 individual letters. In addition, some 5,500 people presented at its information centre. The numbers are quite high and, as chairman of the panel, I am trying to tease out how many of the cases to which they refer involved real complaints, how many related to requests for information, etc.
The consumer has an absolute right to redress. The way in which the system works is fine. If a consumer is asked to return to his or her financial institution, he or she may be dealt with by some extremely nice individuals who will state everything is fine but that the matter of concern to him or her cannot be dealt with immediately, that it is quite complex and that note will be taken of it. The person concerned might have a case but he or she may be fobbed off to some extent. As chairman, I am particularly interested in examining what happens in this area.
Under the legislation, the Financial Regulator does not, theoretically, have a role to play in respect of complaints. If I approached the Financial Regulator with a specific complaint, I would be referred to the Financial Services Ombudsman. There is no imperative for the Financial Regulator to follow up on matters of this nature. In many instances it sends people back to their financial institutions. I am not stating it is not doing its work but I want to be sure in that regard. This matter is very much on my list of things to do during my term as chairman.
Deputy English also referred to consumers trusting the advice of financial advisers regarding what they will receive, training, etc. There are particular courses, etc., which can be pursued by people who work in banks. I will deal with this matter in the context of sickness insurance and the issue to which the Deputy referred in respect of the consumer protection code. I engaged in some mystery shopping at a number of financial institutions. The first thing that happens is that they consider how much one earns, one's outlays and so on. One of the first products they will try to sell someone such as me is sickness insurance.
In commenting on this matter I wish to highlight the consumer protection code and the information supplied to us on it by the Financial Regulator. Concerns have arisen regarding the information that emerges from themed inspections. Such information does not indicate that 40 or 50 institutions were visited. For example, in respect of serious illness policies, the information states the Financial Regulator recently examined the firms operating in this area. A trawl through Google will make it clear to anyone that there are approximately eight such companies in Ireland. The Financial Services Authority in the United Kingdom indicates whether it has examined the operations of eight, ten or whatever number of companies and we have asked the Financial Regulator to do likewise. We are still pushing for this to happen.
I referred to the feedback letter. The Financial Regulator states some consumers may believe all illnesses are covered under a policy, whereas only illnesses specified in the policy terms are covered and that they should be careful in this regard. On my mystery shopping trip, I visited a financial institution and was not provided with a list of illnesses. I asked for such a list and then inquired what would happen if I contracted a particular type of cancer. The young person with whom I spoke informed me that they thought it was covered.
There are particular concerns regarding serious illness insurance. One need only consider The Rainmaker by John Grisham to know that an insurance company will state a particular illness is not covered by a particular policy. It is from this position I am coming in the context of the feedback letter which also states care must be taken with regard to advertising and marketing material, that all firms inspected should explain the specific illnesses covered by their products, that firms are reminded of the importance of the key points of the product and that the latter should be explained fully at the point of sale. We want to get down to the nitty-gritty and discover whether this advice and information are being provided in the correct fashion.
Much of the legislation with which we are dealing in this regard emanates from the European Union. Those at European level are trying, particularly in the area of financial services, to draw up one-page documents in respect of all the documents that must be ticked if one purchases a particular policy. They tested this development in consumer surveys and discovered that people liked it. One need only consider certain comments made in respect of the Lisbon treaty to know that people do not always like to read long documents. Equally, they do not want to be obliged to read long documents when considering their insurance policies. A consumer will often agree something with an insurance broker or bank official and — as is the case with the John Grisham novel to which I referred — then discover, when they read the small print, that certain illnesses are not covered. Perhaps the committee might ask the Financial Regulator to consider the introduction of one-page documents such as those to which I refer in respect of financial products. In that way, people would be in a position to tick off their requirements, etc., when taking out mortgages or insurance policies or committing to other banking products.
The issue of money laundering arose in the context of vulnerable consumers, migrants and others who wanted to open bank accounts. A list of documents is required from them but as they may be residing in rented accommodation, they do not have the documents sought by the bank. The number of documents required seems extraordinary. I understand the code of practice developed by the Irish Banking Federation to facilitate the changing of banking accounts is viewed positively at European level but, as Deputy English noted, consumers are not always articulate enough to fight their corner. I do not mean this in a negative sense. The committee can rest assured that we will offer our views to the groups which are working on the money laundering directive. We have provided an initial opinion but once we reach the stage when guidance documents and the nitty gritty are being addressed, Ms Frances Byrne and one or two other members will join me in a push to make these procedures easier. I would be happy to update the committee on the matter.
I agree that not everybody is informed by our website. There is a considerable number of hits but many consumers with credit union accounts, for example, are happy where they are and do not want to compare prices on travel insurance or other products they can purchase from their credit union. In the context of the national steering committee on financial education, we are trying to ensure this area is not forgotten in terms of how it interacts with the financial services market. This is particularly important in the context of a turbulent market, given that middle class consumers will probably be better equipped to defend themselves than other consumers. Our panel believes up to 17% of the population do not have bank accounts, not to mention those with credit union accounts who have otherwise limited interaction with the financial services industry. We do not want that group to receive a worse deal than others in a turbulent market.
On whether the consumer protection code for credit unions should be compulsory or voluntary, we believe credit union members should have the same protections as other consumers. The difficulty is that the credit union movement is unique in the financial services market. Credit unions are regulated by specific legislation, an area in which the Registrar of Credit Unions has powers. It is a case of using the carrot and stick approach to bring them on board. I hope they will provide a wider variety of products. Why, for example, should a credit union account holder not have access to ATM facilities? If the credit union movement wants to proceed in that direction, we would like to see a code of protection for consumers.
Personal data give rise to serious issues in terms of security. When the case in question first arose, some members of the panel were concerned about the suggestion it was a matter for the Data Protection Commissioner rather than the Financial Regulator. That was fine initially but more laptops were found one week later. Concerns were expressed that one institution was drip feeding information on the major problems it was experiencing. This is an example of how section 33 comes into play. I do not want to mention the institution concerned but I will meet the chief executive, Mr. Pat Neary, within the coming weeks to discuss the issue and ensure consumers are protected. As chairman of the consumer panel, I seek assurance that there is not a systemic problem and that the issue will not develop further. We were late in noticing the problem but it is part of our brief.
In regard to Senator O'Sullivan's question on the composition of the panel, members are appointed by the Minister for Finance. I am not sure if the Senator was present when I thanked the former Minister for Finance for appointing me chairman, even though I do not share his colours. I am happy that he considered me suitable for the position. Our term of office is two years which will conclude at the end of October. The panel can comprise up to 20 members who are experts in consumer matters. The Consumers Association of Ireland can appoint one member. In each of the panel's previous two-year terms the Minister also appointed three to four members from NGOs such as the Society of St. Vincent de Paul, the Money Advice and Budgeting Service and the Immigrant Council of Ireland. As can be imagined given my preferences and the backgrounds of members, the issue of access to financial services is raised regularly.
The Senator also referred to the figures we had provided and asked whether we were concerned about problems in the financial industry. Now that we have been able to get information highlighting the instances and amount of money involved, the small group of members of the panel who met the Financial Regulator is satisfied that the issue is historical. That does not mean, however, that we will no longer monitor the issue. Minor problems in respect of overcharging can arise for various reasons such as computer and systems failures. From the information we have received in the past 18 months, we are satisfied the issue has been resolved.
In regard to a fitness and probity regime for credit unions, I mentioned Davy Stockbrokers and investments made by credit unions which were subsequently found to be not up to scratch. We do not want a fitness and probity regime that would strangle the credit union movement because we are aware that in many areas credit unions experience difficulties in finding people to sit on their boards. Members of the committee will be aware of similar difficulties in attracting people to attend political party meetings. We do not want to require people to study for three years in a university but we have seen examples where credit unions invested considerable sums of money badly and are concerned this practice militates against members of credit unions. We encourage the Registrar of Credit Unions, Mr. Brendan Logue, to continue the training programmes in place for credit unions in particular areas. The credit union movement is very specific and we do not want to change its voluntary nature, which is a unique aspect of the movement in Ireland and some other countries. As with the consumer protection code, one must use an element of the carrot and stick approach. We want credit union consumers to have the same protections as everyone else in the financial marketplace.
I thank members for their comments on education. The national steering committee on financial education recently held a one day meeting in the Westin Hotel and got through considerable work. The committee is pushed by the Financial Regulator but has members from the Departments of Education and Science and Finance, as well as the banking and insurance federations. I am there from the consumer panel. There is also an industry panel representative, as well as representatives from the Money Advice and Budgeting Service, MABS, and similar organisations. We are inclined to assume that schools programmes can deal with all of our problems, from drug addiction to financial fraud. There are excellent examples in the United Kingdom, Italy and Germany of schools programmes which provide children with a financial education. However, the fruits of such programmes are not seen for ten or 15 years. I would like to see pilot education projects in several areas and for various groups such as farmers, women and credit union members. As financial products become more and more sophisticated, the day of trusting the person on the other side of the desk is probably gone. We need to show consumers how to ask questions and look for the right things. If consumers can come to providers with a one page document showing every financial product and the boxes they need to tick, all the better.
My family background is in insurance brokerage. Many of the requirements placed on intermediaries originate in separate legislation. If I want to buy a product from, for example, an insurance broker, I will be given numerous documents to sign. I will be told one signature is required by the Central Bank Act, another by some other information Act and others by Acts dealing with various issues. I ask the joint committee to examine this area and streamline these procedures. When various pieces of information come from different angles, it is difficult for intermediaries to give advice. This leads to confusion. Business regulation for intermediaries could also be streamlined because they have obligations to fulfil various requirements, which are not made of other players in the financial market. The Financial Regulator has a group dealing with insurance intermediaries, to which we will be putting these issues. Some of its members are concerned about small businesses and the over-regulation of that sector. The regulation of insurance intermediaries is a good example of this problem. Various demands are made of insurance intermediaries.
