The first item concerns the draft minutes of the meeting of 28 February 2007, which have been circulated. Are they agreed? Agreed.
An e-mail has been received from Senator O'Toole regarding preserved retirement pensions for civil servants. We will defer this matter until the Senator is present.
The schedule of correspondence was circulated and one or two late items have been received in the meantime. No. 37 is a report from the National Economic and Social Forum. Is it noted?
We should not just note it. The forum's addressing of improvements in the delivery of quality public services is a very important issue. While I expect we will hardly strap the committee into a particular work programme given the short time remaining before the dissolution of this Dáil, we could still commend this report. I am not sure if the report, available on request, has been circulated to all members.
The National Economic and Social Forum could be invited to address the issue before the committee. It is very important given that one of the key demands of the public at present is for improved public services. This is the subject of the report and the National Economic and Social Forum has gone to the trouble to prepare it. This is an appropriate forum in which to consider its recommendations further. I understand it is not practical to address the report in the short time remaining in the term of this Dáil but we should make a recommendation along the lines I have proposed.
I agree completely. If the report is noted, it will be filed away. It is a key report considering that attention on the public service has focused almost exclusively on decentralisation. The quality of the public service is an equally important issue, if not more important.
Is the proposal to invite in representatives of the National Economic and Social Forum at an appropriate time?
Yes, at the earliest opportunity.
We will agree to invite them but we cannot set a date today. We will make contact with them in light of the new schedule.
I welcome the return of Deputy Ó Caoláin after his period of ill health and wish him well. I congratulate him on his role in bringing the peace process to fruition in Northern Ireland. The developments, involving Dr. Ian Paisley and Gerry Adams, were a major breakthrough. I wish Deputy Ó Caoláin well in his efforts concerning Northern Ireland.
Those sentiments are shared by all.
I thank the members.
The next item is an acknowledgement from the Irish Financial Services Regulatory Authority, IFSRA, regarding correspondence by the National Youth Council of Ireland.
A reply from the Department of Finance in regard to the Association of Retired Prison Officers has been received. It essentially states it would be prepared to meet the prison officers. That meeting took place on Monday afternoon at 3 p.m. and a letter has arrived stating that retired prison officers were dissatisfied with the outcome.
I welcome the opportunity to address this correspondence. The meeting that took place on Monday between officials of the Department and the representatives of the retired prison officers was unsatisfactory from the retired prison officers' point of view. They said it was without substance and they were left at a loss to explain what the Department had in mind when it sought the meeting in the first place. There appeared to be no purpose or intent on the Department's part other than to reaffirm its already stated rejection of the case being put on the pensionability of rent allowances in the prisoner officers' case.
With very little time remaining for the current Dáil and this committee, we should make a straight and bold statement to the Minister on this issue. The last correspondence from the Minister indicated there was no point or purpose in addressing the issue further due to the potential domino effect in other sectors. This has been shown, however, not to be the case. There are questions and concerns but there is the justness of the prison officers' case as they have presented it to this committee. We should make a recommendation directly to the Minister for Finance urging a positive revisitation that recognises those surviving claimants. There are barely 100 of them, between surviving prison officers and their widows.
These are the people who were denied the reckonability of the rent allowance in the overall terms of employment. It was an integral part of the terms of employment for prison officers but those who were recruited before 1993 were not afforded it in the calculation of their pension entitlement. It came into effect in January 1994 for all those who joined in 1993 and since, and the gardaí had it for many years preceding that.
The rent allowance was an integral part of the terms of employment, as has been well established at this committee. We should not compound an injustice by denying that entitlement because of any ripple effect that may take place. The injustice must be addressed and I urge the committee to take a strong stand on it. We must urge the Minister to revisit it in the last days of this Government to ensure the case presented is honoured and met before the Government leaves office.
This is a perfect example of how to make work. The issue has been shifted around instead of being addressed, giving the impression something is being done when nothing is happening. There were elderly people at the meeting who had come far with an expectation that they would get a hearing. From what I heard, they felt it was a waste of time. If the Minister is going to say "no", let him say it. Then we know what we are working with, but giving the impression that something is being done is the worst of all situations, particularly when elderly people are involved. They spent a long time making their argument and it was convincing.
Perhaps we should not just make a strong recommendation to the Minister, a number of us should seek a meeting with him on this to achieve a resolution instead of moving the dominos around.
I remember the submission made to the committee some time ago, it was very impressive. One has great sympathy and understanding for the officers and I hoped that the Department might see the need to address what seemed to be an injustice. It seems, however, that the Secretary General indicated on 6 March that perhaps something could be achieved by holding a meeting with officials. If we are to accept the letter from the president of the Association of Retired Prison Officers, it seems it was nothing more than a merry-go-round and nothing came out of it. Surely, if it was suggested there should be a meeting with officials, there must have been some basis for it. Why was the meeting suggested if there was nothing to be discussed or offered? We should get an explanation of that invitation or the statement of 6 March because there was nothing in the response. Perhaps there are two sides to the story but in the response from the association on 27 March, it is stated that nothing was offered and nothing was resolved.
I express my disappointment about the exchange that took place at this meeting. If we take on board what Mr. Delaney said to us when he described the meeting, the least we must do is seek clarification from the Department as to why the meeting was called, its purpose and the Department's view on how the meeting went. We should also form our own view on the case being made by the Association of Retired Prison Officers, make a recommendation directly to the Minister and, if necessary, reinforce that by meeting the Minister to insist that something be done. It is unfair to a group that came before the committee and made its case to have a meeting with the Department in the expectation that something would happen and then for nothing to happen. We must respond to this by making a recommendation in favour of the case made by the prison officers and request a meeting with the Minister.
The committee has heard the cases made by both sides and we must draw a conclusion. We will not be regarded as authoritative but it is disconcerting that the Department of Finance does not appear to have looked at the merit of the case but simply reiterated its position. We should make a serious assessment of this and submit a brief report seeking a ministerial response.
The response from the Association of Retired Prison Officers and the widows is disappointing. It appears the Department of Finance was going through the motions instead of displaying an open mind on reviewing the case put forward by the officers. The committee should issue a recommendation or, if it is more appropriate, find a procedure that would help to address the grievance. The Department of Finance is in the trenches on this matter and does not intend to come out of them.
I support my colleagues on this side of the House. This meeting seems to have been a kick to touch to judge by the fifth paragraph where he states he had to drag conversation out of the officials and pointed out the history and uniqueness of the rent allowances, Garda and Army, so there was a case there. He reiterated that misleading statements came from the Department of Finance over many years.
We should review this issue and do something for these people's entitlements. I commend Senator White on raising it but I am disappointed she is not here because she has been to the fore in leading this campaign.
Is the consensus that we seek an early meeting with the Minister? I suggest bringing a maximum of three from the Government side and three from the Opposition. Is that agreed? If we go through the formalities of drafting a report to lay in the Oireachtas Library that is just paper work. The quickest way to deal with the matter is to send a delegation to meet the Minister.
Perhaps two from each side.
At least two from each side.
Is it possible in seeking the meeting to communicate the consensus of the committee? It is important for the Minister to understand this is not coming from a section of the committee but that we are unanimous.
Yes, absolutely. What numbers do members suggest should form the delegation?
Three from each side and the Chairman.
The convenors on each side can submit the names to the clerk. We will try to arrange it as soon as possible.
I suggest from our side Deputies Finneran, McGuinness and Nolan.
The Deputy also mentioned Senator White. We will ask the convenors to contact the members and we will proceed on the basis that we are seeking a meeting with the Minister.
The next item of correspondence is an e-mail from Deputy O'Connor regarding a submission from the national federation of pensioners associations regarding the qualified adult pension. We should note it because I am sure all parties will address that matter in the coming weeks.
The next item is the annual report of the National Lottery which we should also note. Deputies have received that individually.
Item 42 is a letter from Deputy Ned O'Keeffe dated 6 March 2007 requesting that the committee meet the Irish Charity Tax Reform Group. It had a lobbying session here when several of us met the group. It has furnished revised proposals which it asks all parties to support in their election manifestos.
Thank you, Chairman.
The next item is a letter from Deputy Burton regarding a media investigation into fraudulent activities at financial institutions.
Deputy Bruton requested that the Chairman invite IFSRA to provide the committee with a report. We received a detailed reply last evening.
The reply from IFSRA is not adequate to the issue. An agent of Friends First mis-sold a product representing it as offering an entirely different yield from the actual one. He has been disqualified as a director of the company but the company has taken no responsibility and disputes any liability. Instead it imposed a penalty on the customer when he tried to withdraw some of the policies he held with the company.
The customer is unhappy with the way this was handled and IFSRA's public pronouncement which presented the case as a minor one, saying there was reasonable cause to suspect that breaches had occurred and that the company did not properly inform affected clients about terms. It did not advert to the serious misdemeanour and did not refer to the role of the company. To add insult to injury, not only has the man been the victim of this fraud but he cannot get recompense from the company which denies liability.
The codes of practice are not adequate if a company can walk away from this. The Financial Services Ombudsman may not be able investigate this because it happened in 1997 which is outside the limit for investigations. There must be some onus on financial institutions to have proper codes of practice. There is disquiet about the handling of this case and the regulator's failure to advert to its seriousness. There is a continuing issue about whether the ombudsman can play a role.
We need to hear from IFSRA whether this represents defects in the system for regulating companies where such incidents happen and whether the Oireachtas needs to tighten the legislation or IFSRA needs to tighten codes of practice. These issues are sufficiently serious for us to meet the regulator in order to form a view on whether we need to strengthen the law in this area.
I did not write to the committee. I raised the matter under Any Other Business at the last meeting. The Financial Regulator's response is deeply disappointing. I read another letter on the file today, which Deputy McGuinness forwarded to the Chairman, from a person in Carlow investing in a pension product who was also badly treated. This cuts to the heart of what the Financial Regulator does and whether it supports the investor or customer who is and will be increasingly investing. All politicians in all parties are encouraging people to invest and build up pensions to have lump sums when they retire.
The investor in this case who has been named in the media, Mr. O'Mahony, was in bad health in the 1990s and was advised to invest in a pension product on which he was told the return would be 40%. The product matured in 2005 when it became clear that the return he had been guaranteed would be only 28%. Apparently the person who was the subject of the complaint persuaded the investor to roll over the investment, which was fraudulent and dubious practice. This was not discovered until some time later.
The disqualification agreement is between the regulator and MIS Financial Services Limited and Mr. Stephen Donnelly. My information is that Mr. Donnelly was an employee or executive of Friends First, who went out on his own but maintained a relationship with his former employer, as is common in the financial services industry. He, and others, were involved in this other company, Arley Limited. This reply from the Financial Regulator states Mr. Donnelly was until recently a director of Arley Limited, the company referenced by recent media coverage and that contrary to some reports, Arley Limited is not a subsidiary of Friends First and does not fall under the regulatory ambit of the Financial Regulator.
The information on RTE and which I received states that Friends First was involved in the initiation of this company as an investment vehicle. This type of development is common. It is the kind of structure used for many individuals with high net worth. The regulator's reply is completely inadequate. An investment vehicle that is the product or outcome of a particular financial services provider, but at the same time is quasi-distant, will fall outside the regulatory ambit. That is unacceptable and I am disappointed at the reply of the Financial Regulator. If this was to be taken at face value, I would have no problem in constructing schemes that would entirely avoid the whole ambit of the Financial Regulator. It is an issue that the committee must address. Taken together with the letter from Deputy McGuinness on the pension investment in Carlow, all is far from well with a very expensive structure of financial regulation which it was hoped would give comfort to people who are taking their life savings in their hands and using financial services companies in good faith.
Should we talk to the Financial Services Ombudsman rather than the regulator?
Perhaps we should talk to both.
This is not a regulated entity. The regulator cannot do anything with this.
I think Mr. Meade, the Financial Services Ombudsman, will deal with it.
Do we accept the view of the Financial Regulator?
The committee has established previously that there are many financial organisations that do not fall under the remit of the Financial Regulator.
This product was sold before the Financial Services Ombudsman's remit came into force. Under existing law he cannot examine this retrospectively. The Financial Regulator has been given the power to promulgate codes of practice. These should cover how people are treated who are clients of a company and are defrauded by its ex-employees. The codes of practice are not in place to protect people.
There are questions over how the Financial Regulator dealt with this case and the extent to which it alerted people to what occurred. This needs a proper response from the Financial Regulator to clarify whether the regulatory regime in place is adequate or better codes of practice should be in place. At the very least we should hear from the Financial Regulator. When this letter was written, it knew what the issues of concern were. This was a straight bat, protecting its wicket and no attempt to answer the issues. This is not an adequate response to the issue. I know we are up against time schedules but I do not believe we should kick it off with an anodyne letter to Mr. Meade who has no power to address this, whatever his good will.
Neither has the Financial Regulator.
What does not fall under the remit?
It says this company is not a subsidiary of Friends First.
That is not the issue. It was a Friends First product that was mis-sold by its employee. It is Friends First which penalised the customer when he withdrew his trade. It is Friends First that claims it has no liability. When Friends First was pursued by the regulator, there was an issue about whether the ex-employee was in a company he should not have been in. The regulator claims this was a company that was not regulated. We must accept that.
The other issues — how the case was dealt with, how the codes of practice can allow a company walk away from this — are intact. Is the system that we have allowing people to go to a Financial Services Ombudsman adequate given this experience? All these issues are still live and extant. We need to hear a response from the various agencies. The Financial Regulator answered a question that was not asked. Its letter does not answer the issues raised in my letter.
The person who lost his money claims that under the insurance intermediaries legislation, when the penalty was applied, Mr. Donnelly, the investment manager who was being censured, was obliged to insert a notice of cancellation of his agency in a national newspaper within three weeks. He did not do so. Friends First did not insert a notice either. Eventually, Mr. Donnelly placed the notice in a newspaper one month after the cancellation of his agency.
As an ex-employee of Friends First, it would appear the bulk of his work was selling Friends First products. The two parties were intimately related. This is the current practice in the financial services. Managers and assistant managers in various financial institutions go out on their own as brokers for their former employers. The majority are fine. However, if the relationship goes sour, as happened in this case, it appears the non-direct arrangement is outside the regulatory ambit. That is bad news for those trying to put money into financial products for pensions. It is in the interest of everyone that this side of financial services is regulated.
The issue raised by the Opposition spokesperson for finance is serious. It merits a special committee meeting with the Financial Regulator and the Financial Services Ombudsman. If what Deputy Burton says is right, it is very serious.
At this stage we will inform the Financial Regulator that the committee is not satisfied with its response, with a view to arranging a meeting as soon as practical.
Could my related correspondence be included in that request? I do not want to receive a letter like this. I go along with what Deputies Burton and Bruton have said.
Is that agreed? Agreed. We have no option but to adjourn the meeting, since we must deal with the OPW Estimates.
Will it be agreed without discussion?
Not at all. We have discussed everything hitherto.
They are all relevant issues.
The meeting to deal with the OPW Estimates is scheduled for 3 p.m., and we must allow ten minutes for the change-over of the recording facility. We therefore have no option but to close the meeting at this stage.
At the end of the document, members received a draft report on the interim report on the underclaiming of tax credit allowances and reliefs. I wish to finalise that at a meeting next week, but I would like members' permission to circulate it to the witnesses who attended today to seek their observations on its accuracy. Those witnesses were representatives of the Irish Taxation Institute, the Consumers Association, and the Revenue Commissioners. I wish to accord them a small courtesy and agree that it be circulated to them immediately with a view to our finalising and publishing the report before Easter.
If members have amendments, I ask them to submit them to the clerk before next week. I have written a draft on the committee's behalf and, apart from the wishes of the Government side, much of what Opposition spokespersons asked to be included forms part of the findings and recommendations. I hope there will be consensus on this at next week's meeting. Then we can—
All the documents I have are to do with the EU.
We will add them on.
No, I am talking about what we have been given. I have an annual report.
My apologies. There is another one, the draft of which was circulated only this morning.
I am sorry, but I do not have it.
It was left in this morning, since I concluded my work on it only last night. I understand members will not have had an opportunity to read it. The first 12 pages form the essence of the report, the remainder consisting of details and terms of reference. If members have observations or further recommendations, perhaps they might give them to the clerk in order that we might sign off the report next week.
At this stage, we are adjourning the meeting until—
A very important matter on the agenda is a trip to Berlin at the end of April.
Does any member wish to go?
It would depend on the week.
Is any member seriously interested in attending?
All those with safe seats should put up their hands.
We will not tempt fate.
We will return in 15 minutes, but the joint committee will meet again at 2 p.m. next Wednesday to finalise all the work in the schedule that we did not deal with today. We will have the Estimates for the Department of the Taoiseach at 4 p.m. that day.
The select committee will meet here in ten minutes.
