Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Thursday, 2 Mar 2017

Financial Services Ombudsman's Bureau - Strategic Plan 2017 and Tracker Mortgage Issues: Discussion

Vice Chairman

We will now proceed to item No. 10 which is a discussion on the Financial Services Ombudsman's Bureau strategic plan for 2017 and tracker mortgage issues with Mr. Ger Deering, the Financial Services Ombudsman, and Ms Elaine Cassidy, the deputy Financial Services Ombudsman. They are both very welcome to our meeting. Before we hear from our witnesses I have to read out a note on privilege.

I advise the witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. Deering to make his opening remarks. We will then proceed to questions from the members.

Mr. Ger Deering

I am pleased to have the opportunity, together with the deputy Financial Services Ombudsman, Elaine Cassidy, to engage with the committee this morning on our 2017 strategic plan. We also welcome the opportunity to engage with the committee on the issue of tracker mortgages.

First, I will give a brief outline of our strategy. It is important to begin by letting the committee know we have just commenced the second year of an ambitious three-year programme. In 2017 we will continue to adapt our processes in response to feedback received from service users. The three-year change programme was devised following the completion of an independent strategic and operational review into the operation of the offices of the Financial Services Ombudsman and the Pensions Ombudsman. This review was commissioned jointly by the then Pensions Ombudsman, Paul Kenny, and I. The review report, which is available on our website, recommended that we should adopt a more proportionate, informal and preventative approach to dispute resolution. Having consulted widely with stakeholders including those who had made complaints against financial service providers, the review delivered a number of key recommendations at the end of 2015 which we commenced implementing in February 2016. This involved a major change programme, which commenced in February 2016. This has delivered significant change in how we manage complaints. As a result of these changes, we now undertake considerably more direct interaction with both consumers and providers to deliver a faster, more effective and efficient service.

Our 2017 strategy will continue to raise the bar on consumer protection and complaint handling through the use of mediation techniques and, where disputes are not resolved by agreement between the parties, through fair and impartial investigation and adjudication. I am happy to report high levels of satisfaction from those using the new service. A structured survey of both complainants and providers who use the new dispute resolution service has provided a positive endorsement of the effectiveness of the service. The results prove that the newly implemented processes are working well and that the changes have had a positive impact. The feedback shows us that we have laid a strong foundation on which we will continue to develop our services and improve how we interact with our stakeholders. Our strategy for 2017 seeks to build on that firm foundation as we continue to improve our services into the future.

As the committee will be aware, the Government has decided to amalgamate the offices of the Financial Service Ombudsman and Pensions Ombudsman. We engaged with the committee in October last year as part of the pre-legislative scrutiny of the Financial Services and Pensions Ombudsman Bill which, when enacted, will provide the legislative basis for the merger. We also engaged on that occasion with the committee on Deputy Doherty's Private Members' Bill relating to the Financial Services Ombudsman.

I was appointed Financial Services Ombudsman in April 2015 and I was appointed Pensions Ombudsman in May 2016 under the Social Welfare and Pensions Act. I currently hold both of those offices in separate capacities under the relevant legislation. My colleague, Ms Cassidy, was appointed deputy Financial Services Ombudsman in January 2016. She is the deputy ombudsman-designate for pensions. As the current legislation does not provide for a deputy Pensions Ombudsman, she will not assume that element of her role until the necessary legislation is enacted. We look forward to amalgamating fully both offices when the legislation is enacted and look forward to the enactment of other legislative measures that would bring greater protection for consumers. In advance of the enactment of the legislation necessary for the merger, our 2017 strategy commits us to doing everything we can to make the amalgamation a success. Both offices are now co-located and work in close co-operation, albeit under separate legislative provisions. We are actively working with the Department of Finance and the Department of Social Protection to ensure a smooth amalgamation and successful and seamless delivery of the services.

Our core objectives, as set out in our strategic plan, are to operate an efficient, effective and fair dispute resolution process that mediates, investigates and adjudicates on consumer complaints; to provide an excellent customer service; to raise awareness of our work among the public and our stakeholders; to promote compliance by financial service providers with best practice in the provision of products and services; to support and develop the skills and competences of our staff in order to offer the best service to our users; to support the Financial Services Ombudsman council in its work; and to liaise with the Central Bank of Ireland, the Department of Finance, Oireachtas committees and other relevant bodies in order to improve the financial services market for consumers. For each of these objectives, our 2017 strategy sets out key performance indicators and identifies the timeline and critical success factors. The 2017 strategic plan has been developed by focusing on 2017, while also bearing in mind future years.

We will be happy to engage with the committee and answer any questions members have on the strategic plan, but before that I will use the remaining time to provide the committee with some information on tracker mortgages.

The long and well established role of an Ombudsman is to seek redress, to redress the difference in power and resources between the individual or the citizen and large institutions when resolving disputes. This is particularly important when dealing with the inequality of arms that exists between a consumer and a financial service provider. A time limit of six years for making complaints to the Financial Services Ombudsman is set out in the current legislation. Both the Financial Services and Pensions Ombudsman Bill and Deputy Doherty's Private Members' Bill, which were considered by the committee last October, proposed an extension to the time limits for complaints. We would very much welcome such an extension as it could be particularly beneficial in respect of complaints relating to mortgages or financial products with a medium to long-term life span.

Where I uphold a complaint, I have a wide range of powers available to me. I can direct a financial service provider to pay compensation of up to €250,000. I can also direct rectification. Such rectification can be very significant as it can involve putting a person back in a position that they were in before the complaint arose. In some instances, such as where a person was denied a tracker mortgage or the incorrect interest rate was applied, this may potentially be more important than any compensation offered. The office of the Financial Services Ombudsman has played an important role in tracker issues to date. I assure the committee that I will use the extensive powers available to me to ensure that customers of financial service providers who do not receive their entitlement and who are treated unfairly will have access to redress through our office. I will not be found wanting in using these powers as they were intended by the Oireachtas where I find the conduct of the financial service provider to be contrary to law, unreasonable, unjust, oppressive or improperly discriminatory.

I consider it beneficial to provide the committee with a brief background to the key events and timelines relating to tracker mortgages. The Financial Services Ombudsman first began to receive complaints regarding tracker mortgages in 2009. In fact, it might be more correct to say the end of 2008. We first started dealing with them in 2009 but we received a small number of complaints in 2008. The 2009 annual report of the then Financial Services Ombudsman included a case study involving a borrower who had been wrongly given the entitlement to return to a tracker rate following a period of fixed interest rate.

In 2009, 2010 and 2011, the Financial Services Ombudsman upheld a number of complaints and directed financial institutions to put complainants back on tracker mortgages. Some of these findings were challenged in the High Court. Of particular note, PTSB appealed four findings of the Financial Services Ombudsman to the High Court in 2011. All four of these findings, issued by the Financial Services Ombudsman in July and August 2011, had directed the bank to reinstate the complainants' tracker mortgages. In August 2012, the High Court delivered judgment in all four cases. Two of the complaints were remitted back to the Financial Services Ombudsman for further consideration, while the bank was unsuccessful in the remaining two appeals. In October 2012, the High Court gave PTSB leave to appeal to the Supreme Court against those two findings. These two appeals were listed for hearing by the Supreme Court on 16 February 2015. However, when they were listed for mention by the Court on 5 February 2015, they were withdrawn by the bank. It was around this time that the Central Bank had commenced an enforcement investigation of PTSB, which resulted in some customers being returned to tracker mortgages and receiving redress.

Shortly after I was appointed in 2015, I commenced a comprehensive analysis of tracker mortgage complaints which had been decided by the Financial Services Ombudsman between 2009 and July 2015. The aim of this analysis, which covered almost 500 findings over that period, was to inform the Central Bank of the various issues relating to tracker mortgages that the Financial Services Ombudsman had encountered. We worked in co-operation with the Central Bank in line with the memorandum of understanding in place between the organisations and I presented the analysis to the Central Bank in November 2015. I understand that this information was of assistance to the Central Bank in scoping the examination currently under way in all the banks. As the committee is aware, the objective of the examination is to ensure that lenders conduct a complete review of their mortgage loan books to assess compliance with both contractual and regulatory requirements relating to tracker mortgages and, in situations where customer detriment is identified from the examination, to provide appropriate redress and compensation so as to ensure fair outcomes for customers of those lenders. I support fully this objective of the Central Bank and my office has worked in close co-operation with it to ensure any information we hold that is useful in achieving this objective is made available to the bank.

I became aware in early 2016 from correspondence sent to a complainant who had received a finding from the Financial Services Ombudsman by her bank that at least one bank proposed to exclude customers who had brought complaints to the Financial Services Ombudsman from the examination. On becoming aware of this, I wrote to the CEOs of all the banks informing them that I was firmly of the view - which is shared by the Central Bank - that no mortgage holder who has made a complaint to the Financial Services Ombudsman should be treated any differently with regard to the examination by virtue of the fact of having made such a complaint, irrespective of the outcome. I secured confirmation from each bank that no mortgage account holder coming within the scope of the examination will be treated any differently by the bank because a complaint has been made to the Financial Services Ombudsman.

Prior to and throughout the examination process, we have worked closely with the Central Bank and are in ongoing communication with complainants who have complaints with our office regarding their bank relating to tracker mortgages. We are currently dealing with approximately 400 complaints relating to tracker mortgages. In the vast majority of these, the mediation or investigation and adjudication of the complaint has been put on hold pending the outcome of the Central Bank examination. The reason for this is twofold. First, it will ensure that the Financial Services Ombudsman will have the fullest information available in arriving at our decisions following an investigation and adjudication of the complaints because we will be able to take into account that additional information. Second, it will ensure that complainants will remain and continue to have the right to have their complaint considered by the Financial Services Ombudsman if they are unhappy with the examination as it relates to them, which is very important.

If, having had his or her complaint on hold with the Financial Services Ombudsman, FSO, a complainant receives a proposal from their bank and the complainant advises the FSO that he or she is satisfied with that offer we will note that the matter has been settled and our file will be closed. If, on the other hand, having put the complaint on hold with the FSO a complainant receives a proposal from his or her bank that is not acceptable or no proposal is offered, we then can progress the complaint. There are a number of potential complaints we believe may arise following the completion of the examination process which the FSO may have to deal with. These could include complaints that a person was not returned to his or her tracker mortgage at all or that they were not returned to a tracker mortgage at the correct time or at the correct margin. Further, a complainant may well be returned to his or her tracker mortgage at the right rate and right time but may not be satisfied with the level of compensation offered. Indeed, there may also be complaints about the process itself, for instance, the manner in which the claim for redress was dealt with as part of the examination. I remind the committee of the assurances I gave here last October, that I am, along with the deputy ombudsman and our entire team, fully committed to using any powers afforded to the proposed financial services and pensions ombudsman, our existing powers and any enhanced powers given by the Oireachtas to the fullest possible extent.

I can assure the committee that together with my team, I will play my part in providing redress for complainants to the FSO where I am of the view that the conduct of their financial service provider was contrary to law, unreasonable, unjust, oppressive or improperly discriminatory. I thank the Chairman and members for the opportunity and we are happy to take any questions.

Deputy Sean Sherlock

I welcome both Mr. Deering and Ms Cassidy to the committee. Mr. Deering stated that the FSO is dealing with 400 complaints on tracker mortgages. Is that the cumulative number of complaints or are there more?

Mr. Ger Deering

No, it is the number of complaints which are live and still in the system. We have dealt with approximately 1,600 complaints from 2008 or 2009 to date. Of those, 400 are remaining.

Deputy Sean Sherlock

I have a figure of 600 for tracker mortgages specifically. Is that correct?

Mr. Ger Deering

It would depend on a particular time. It is a moving figure as, for example, we have already received 27 this year. We keep receiving complaints and while they all will be dealt with, the total figure since the complaints started to arrive is 1,600.

Deputy Sean Sherlock

If I understand the figure correctly, the FSO has carried out a review of 600 complaints regarding tracker mortgages in 2015.

Mr. Ger Deering

It was just under 500. On the figure of 600 complaints, just under 700 - something like 684 findings - were issued. That may be the figure the Deputy is thinking of and there were about 500 cases in the analysis.

Deputy Sean Sherlock

It is quite a volume nonetheless. Mr. Deering states that two appeals relating to tracker mortgages were listed for hearing on 16 February 2015 and when they came for mention, they were withdrawn by the bank. Why were they withdrawn?

Mr. Ger Deering

I do not believe we were given a reason at time. As far as I know, they were just withdrawn. At that stage the Central Bank was involved in that area but that is just speculation on my part; I do not have the exact reason.

Deputy Sean Sherlock

Did the bank possibly settle with the complainants at that stage?

Mr. Ger Deering

No, I do not think that was the reason they were withdrawn.

Deputy Sean Sherlock

On the FSO's interaction with the Central Bank, I will try to go back to what Mr. Deering said. The FSO stated that two of the complaints were remitted to it for further consideration, while the bank was unsuccessful in the remaining two appeals. Mr Deering stated that the FSO is waiting for the Central Bank to come back to it. He stated:

We are currently dealing with approximately 400 complaints relating to tracker mortgages. In the vast majority of these, the mediation or investigation and adjudication of the complaint has been put on hold pending the outcome of the Central Bank examination statement here.

What are the FSO's interactions with the Central Bank at present in respect of this process? How long will it take? Are those 400 cases de facto in limbo?

Mr. Ger Deering

To be clear, we ourselves are of the view that they should be put on hold. We think it is to the benefit of the complainant. The reason for that is a significant amount of extra information may become available to us as part of the examination. We will require of the provider whatever information is given to the Central Bank on foot of the examination. It will have to provide us with that same information, which will enhance our investigation role into it. The other reason is that with the Financial Services Ombudsman, as indeed with any body such as ours, there is only one bite of the cherry. If people got an adjudication from us now, they could not have the same complaint dealt with later. From our experience, there is no guarantee that even if people get something from the redress, they will get the correct redress. Someone might get a tracker back but it might be at an interest rate that is not the correct one or it might not come back from the time that it ought to have. What we are trying to do is preserve complainants' ability and rights in this regard. It is not often or always appreciated that when they have gone through the full examination process and used the appeal system of the banks themselves, we can still deal with that complaint and will deal with that complaint.

Deputy Sean Sherlock

Presumably, those complainants are communicated with and are fully au fait with the process in hand.

Mr. Ger Deering

Absolutely. That process goes back as far as that time the Deputy mentioned when the court cases were going on. If one looks at the duration of time, that is, from 2011 to 2015, there were about 100 people who had complaints in our office at that time with PTSB. We wrote to those on an ongoing basis, initially because the High Court case was pending and then the Supreme Court case was pending. We had no option but to put them on hold but after that, they were put on hold voluntarily in agreement with the people themselves. Similar processes applied over the last year. A small number of people have asked to go ahead with their complaint due to the frustration, which we understand. We are communicating with them at the moment. If we have to go ahead, we will but we do not think that it is in people's best interest to do that just now. In the next two weeks, all those 400 people will be receiving an update and further communication from us.

Deputy John McGuinness took the Chair.

Deputy Sean Sherlock

How many complaints has the FSO upheld?

Mr. Ger Deering

It varies from year to year. In total, 116 have been fully upheld and 59 have been partly upheld.

Deputy Sean Sherlock

I am asking specifically about tracker mortgages.

Mr. Ger Deering

That is trackers.

Deputy Sean Sherlock

What percentage of the number of complaints pertain to trackers?

Mr. Ger Deering

Over the years it varies.

Deputy Sean Sherlock

What is the FSO's success rate?

Mr. Ger Deering

It would vary over the years from 30% to 9%. It was 30% in 2009 and 9% in 2015, I think.

On the figures, I wanted to say we are as comfortable as we can be with the figures we are giving the committee but as our system used to record all mortgages as mortgages over time, we have had to do a lot of work to extract out trackers. We are comfortable that those figures are pretty accurate.

Deputy Sean Sherlock

We accept that. What has been the largest payment of compensation made to date?

Mr. Ger Deering

I would not know off the top of my head. Most of those were awarded in the early stages and there was not actually a lot of compensation. I am not commenting on whether that should have happened but at that stage they were putting people back pretty quickly. Compensation today for something that happened in 2008 or 2009 would have to be of a very different order to somebody who was receiving compensation in 2010 or 2011 for something which happened the previous year. It is a very different space we have now.

Senator Gerry Horkan

I thank Mr. Deering and Ms Cassidy for their opening statements. On the establishment of the new merged entity and the strategic plan itself, why has it been determined necessary for the FSO to implement this change plan and to change the way that it is delivering its services? Is there an acknowledgment that there were deficiencies in the previous working model?

Mr. Ger Deering

We undertook a strategic and operational review in 2015. We consulted with the people who had used and had taken complaints through the service. I think more than 400 people were engaged in that survey. We consulted with representatives of consumer groups and of industry. Every one of them came back and said we needed a simpler, faster, more effective and efficient way of dealing with complaints. For a whole variety of reasons the process had become very legalistic and very burdensome and it really was not accessible. Interestingly, it is very early days yet but in a survey we did recently of people who had brought complaints through the office during the first six months, they were asked what word they would associate with the service. We were very pleased that the top word which came back was "accessible" because that was the problem that we had.

We acknowledge that the office had developed in a way that was not as friendly to complainants. As I mentioned at the outset, the role of an ombudsman is to level the playing pitch and to reinstate an equality of arms between the complainant and the provider, and if the system is very legalistic and heavy that does not suit the consumer in the vast majority of cases.

Senator Gerry Horkan

The office is committed to issuing within three working days a written response to complaints received and to follow up with a phone call within a week. Has the office adhered to those benchmarks and is a tracking system in place to make sure it has or has not?

Mr. Ger Deering

I will ask Ms Cassidy to take that question.

Ms Elaine Cassidy

The straightforward answer is yes. We would respond immediately, usually within a day or so, to acknowledge the complaint, and then our dispute resolution service would take on the complaint immediately after that and make contact within that week. That process of engagement would start, and sometimes it would be quick. It might be over in a few days and on other occasions it might go on for months, depending on the complexity. The dispute resolution staff would be in contact with the complainant throughout the process.

Senator Gerry Horkan

That brings me on to my next question. For cases that go to through the formal investigation process and ultimately adjudication, how many of those have been completed within the target of 20 weeks of the commencement of the formal investigation?

Mr. Ger Deering

We introduced this new process on 1 February 2016. The concentration in the early days has been on dispute resolution. It is a new system, and they are only now beginning the new adjudication process. Ms Cassidy might have more detail.

Ms Elaine Cassidy

We have really just started. This is the 2017 plan, so we have not come out the other end of those just yet.

Senator Gerry Horkan

Is it too early to say whether the office has or has not been able to meet these new targets?

Mr. Ger Deering

On the dispute resolution which was brought in from 1 February last year, we absolutely are meeting those targets. The next phase, which is the adjudication phase, has only started. It is a three year programme, and it is important to say that it will roll out. This year the focus will be on adjudication. We hope we will be able to come back to the committee and say we have met those targets, but it is too soon at the moment.

The Senator has reminded me of an important issue. We are running a legacy system. If we had set up a new organisation on 1 February last year, we would be in a great position and life would be simpler for everybody. We had 2,200 legacy complaints in the system when we started. We had to draw a line somewhere, so we said that from 1 February, any complaint coming in would go through the new process. The complaints already there are going through the old process. Sadly, I have to say that there are complaints in the old process which are still taking a considerable length of time, but if we did not set up the new process, everybody would still be in that situation.

Senator Gerry Horkan

Of those 2,200 that were outstanding in the old process from a year ago, how many have been resolved? Are we still on 2,100? Are we down to 800?

Ms Elaine Cassidy

There are approximately 300 still open and the 400 trackers which are on hold.

Senator Gerry Horkan

Does the 2,200 include trackers as well?

Mr. Ger Deering

Most of them, yes.

Senator Gerry Horkan

Approximately 1,500 are closed in their entirety. There are 300 coming to some kind of conclusion and 400 more are trackers, which are a separate issue.

Mr. Ger Deering

We have also received 4,500 new complaints.

Senator Gerry Horkan

They are new complaints dealt with in the new process.

Mr. Ger Deering

Yes, and many of those have been closed and have been dealt with in the system.

Senator Gerry Horkan

I was inquiring because sometimes legacy systems are inherited and put in the corner, as it were, while the new stuff takes precedence.

Mr. Ger Deering

We were very conscious of that. The figure provided does not fully reflect the achievement in that some of that 1,500 identified were very difficult legacy cases. That is why they were there. In some cases - one in particular - there had been the exchange of documentation with legal representatives for a number of years. We got them in to mediation for one day and they resolved their complaint.

Senator Gerry Horkan

The office states that it communicates progress to complainants throughout the dispute process. How does that communication take place and how frequent is it? Can people look at their complaints online or are updates by phone, e-mail or letters provided?

Ms Elaine Cassidy

We give the complainants a choice. When we set up the service at first, we thought there would be more demand for face-to-face mediation. Our staff are mainly qualified mediators and they are very comfortable with setting up face-to-face mediation. We found that complainants preferred phone mediation primarily. They liked the opportunity to think about things between the calls and to take their time and consider the matter carefully. It is primarily phone-based mediation. We do exchange a certain amount of documentation via e-mail. The level of communication with the complainant would depend on the complexity of the issue. Some things like permanent health insurance, for example, can go on for months, but some small accounts matters can be dealt with very quickly. The mediator would contact both parties and put the consumer side to the financial institution and explain to it the impact it has had on the consumer. The mediator would tease out with the bank whether it had followed the correct process and considered the consumer codes and would discuss what rectification the bank is prepared to put to the consumer.

Senator Gerry Horkan

Is it fair to say that the level of phone mediation was not expected to be so high? Does that result in efficiencies within the process? One can deal with many more complaints per hour on the phone that one can if arranging meetings and scheduling them every half an hour or hour or so.

Ms Elaine Cassidy

Yes, that is a fair point. It is more efficient in some ways. There is a certain cohort that it would probably be more efficient to mediate with face to face. The ombudsman mentioned the case that spent five years at the document exchange phase which was sorted out in one day of mediation. We are still finding our way on this. There are some cases that would be better off with face-to-face mediation, but we followed the demand for phone in the first instance. We will learn as we go and perhaps change the model a bit.

Senator Gerry Horkan

Do those opting for face-to-face mediation have to go to the office of the ombudsman? If one is based near the office that is fine, but if not, it is a problem. Are there regional or outreach programmes where the office arranges meetings in hotels or other offices?

Ms Elaine Cassidy

At the moment the meetings are in our offices, but if someone had a particular request or need we absolutely would-----

Senator Gerry Horkan

If the complaint is in Donegal, the people are in Donegal and the institutions are in Donegal, for example, or in Kerry or Limerick, it probably makes more sense if the mediation could be done at those locations and a member of staff from the office would go there instead of the other way around.

Mr. Ger Deering

We are quite happy to do that, and indeed we have done it. We have done it occasionally for oral hearings. There is another side to that in that sometimes people do not actually want the mediation in their own area, because if it is known that a financial ombudsman gig ended up in a local hotel, people do not necessarily like that. Sometimes people prefer it, but it is something we will look at in the long term. Senator Horkan was going through some figures earlier, and perhaps the most unbelievable change is that up until 2016, 99.9% of service providers refused to engage in mediation. We resolved 70 complaints in 2015 through mediation and eight in 2014. We have resolved approximately 2,270 complaints through the new process in 2016.

Senator Gerry Horkan

Is that because the banks have changed their own regulations?

Mr. Ger Deering

They have changed their culture. We had to work with them to get them to change that culture. We reminded them that the people affected are customers of the banks. In the past there was a handing over of complaints and an attitude that the ombudsman would deal with it. We had to remind them that the people complaining were the customers of the banks who had complaints and problems with the banks. We told the financial institutions not to get hung up on jurisdictions, because sometimes a financial service provider will say there is no jurisdiction because a complaint is two days beyond the six year rule. This is about trying to resolve the complaint. Whether it is in or out of jurisdiction, the institution has a problem if the customer has a complaint. We have to look at jurisdiction very carefully when we move on to adjudication because the law would require it.

Senator Horkan asked if people are happy with the communication from the office. That was one of the very interesting things to come out of our survey. Perhaps Ms Cassidy can provide the figures.

Ms Elaine Cassidy

I cannot remember the precise number but it was between 80% and 90% satisfaction. We asked a number of questions around consumer satisfaction and whether they were happy with the length of time taken, the level of communication and the level of knowledge and politeness of our staff, and they were generally above 80%. Some of those metrics went up into the high 90% mark in terms of satisfaction ratings. In every single case bar none, they were considerably up - by 20% in most cases - on the old system from 2015.

Senator Gerry Horkan

Is Ms Cassidy saying that the culture of the banks and the other institutions has improved significantly in terms of how they treat customers and how they regard the bureau as an instrument of dispute resolution? She is saying that in the old days it was them using phrases such as "The rule says", "We can get away with that because it is six years and a day", "We do not have to deal" or "Write to us and we'll consider it in the fullness of time". Obviously, the bureau has gone from resolving eight complaints in 2014 to resolving 2,270 in 2016. This represents an enormous improvement in the context of matters being resolved. Is there a noticeable change within the banks and other institutions as to how they are dealing with people?

Mr. Ger Deering

There is a noticeable change in how they deal with complainants and those who have complained to us. Our aim is to get that to the next stage. We have no evidence for this yet, but our aim is to get that back into the banks themselves. In other words, it is to resolve it-----

Senator Gerry Horkan

Before it ever comes to the bureau.

Mr. Ger Deering

Correct. We see that sometimes. We see genuine efforts to resolve complaints before they come to us. We have started with the people we are dealing with and we want that to push right back up to board level because, ultimately, it is about a culture of customer service that needs to exist.

Senator Gerry Horkan

Mr. Deering alluded earlier to the bureau's commitment to reviewing online feedback on a monthly basis. He says that has been very positive.

Mr. Ger Deering

Yes. What will happen there is that people get an automatic message. On our complaint form, there is a box one can tick if one is willing to give feedback. Anybody who ticks that box will automatically get a survey. We will, therefore, have a rolling survey all of the time of the views of our customers.

Senator Gerry Horkan

Obviously, we are all bombarded with e-mails, surveys and requests to fill in information. What percentage return has the bureau achieved in light of the fact that most people probably tick the box? What percentage of people tick the box? Of those who tick the box and get the form, what percentage reply?

Ms Elaine Cassidy

The number who ticked the box was not as high as we would have liked. It was probably only about 30% of people. We have since changed the words.

Senator Gerry Horkan

It is opt-in rather than opt-out or vice versa.

Ms Elaine Cassidy

That kind of thing. We think it was not clear that we were only going to ask them about surveys. I think sometimes people's default response is to say "Oh no, I won't do that". As such, we have changed the wording and we are hoping to get it up from 30%. In terms of the numbers who responded to the survey, we got a return of over 40% from consumers. We also carried out a provider survey a couple of months later and got a return of 40% as well, which I understand from the market is very high.

Senator Gerry Horkan

I am sure it is, but are we saying then that all the feedback is based on about 12% of the number of cases if it is 40% of 30%?

Ms Elaine Cassidy

Yes, in our last survey.

Senator Gerry Horkan

Equally, one is more likely to hear bad news than good. The fact that the bureau is hearing good news is positive.

Mr. Ger Deering

An indication of that was when we did the first survey as part of the strategic and operational review, it went to 460 people on a Friday evening and we had over 200 responses by Monday morning. Senator Horkan is right that the responses that come quickly are generally the ones who welcome the opportunity to tell one they were not happy. The key thing about this is that it will be done over a very long time and it will not just be selected people. It will be a measure that we can consult.

Senator Gerry Horkan

The bureau will see trends and so on.

Mr. Ger Deering

Exactly.

Senator Gerry Horkan

Is the move towards greater use of mediation a reflection of best practice internationally or was there a particular reason the bureau moved in that direction? Is that where counterparts in other countries are moving?

Mr. Ger Deering

It was a mix of all of the above, but the most important thing was that the Oireachtas in drafting and enacting the legislation 12 years ago put mediation as the primary reason. Our legislation was ahead of its time. Mediation was not quite as well known or popular then but our legislation is very clear that the financial services ombudsman shall resolve disputes by mediation and, where necessary, by investigation and adjudication. As such, it was the preferred option. There are about three more statements within the legislation providing that it should be informal, without regard to technical or legal form and all of that. Yet, we developed in a different way. I gather that there is a Second Reading in the House today of the Mediation Bill. At both European and national level, mediation is a preferred option. During mediation week a couple of months ago, Ms Cassidy and I visited the Four Courts and heard the President of the High Court, the President of the Circuit Court and the President of the District Court all pushing for mediation. There are many reasons it is the best solution. We discovered in our research that providers misunderstood mediation and did not actually understand how it operates. It was about overcoming some of those misunderstandings and fears.

Internationally, I note our counterparts in the UK. We have a staff of 34, including an ombudsman and deputy ombudsman. In the UK, they have an ombudsman, 300 ombudsmen and a staff of 4,000. It is a very different scale but they are hugely into mediation. We looked as part of our research at New Zealand and Australia where we saw telephone mediation in place. I had experienced telephone mediation through the labour relations agencies in Northern Ireland which do a lot of it. It was by looking at other organisations, including organisations similar to ourselves, that we saw that it seemed to be working everywhere else.

Ms Elaine Cassidy

Aside from financial services, it is the best practice. The research says that small parties are advantaged by mediation. If one has a qualified mediator in the room, he or she can rebalance the power between the parties and refuse to allow the bigger party to take over and intimidate and enforce its will on the small party.

Senator Gerry Horkan

Other agencies sometimes publish case studies for people to consider. Does the bureau publish case studies and trends in complaints? For example, the trend in complaints might be that they refer more to tracker mortgages or to insurance products. If so, how many were there last year? Is there a trend?

Mr. Ger Deering

We publish reports and trends. Certainly, we publish case studies. We did not publish many in the last while because of the changing process. We will by 31 March 2017 publish an annual review of 2016. Either that will include case studies or a case studies publication will be launched at the same time. Those studies will cover adjudication and mediation. What was the question on trends?

Senator Gerry Horkan

It was on complaint trends.

Mr. Ger Deering

Not surprisingly, they peaked a few years ago in terms of the collapse, but they are back now at approximately 4,500 a year for the last three years. That may be down very slightly this year.

Senator Gerry Horkan

Does the bureau analyse the different complaints?

Mr. Ger Deering

We do. We look at whether banking or insurance is up. There have not been major shifts in the last few years.

Senator Gerry Horkan

The bureau has a key performance indicator, KPI, to inform financial service providers of their role and responsibilities within the financial services industry. What does it mean by "inform"? One hopes these people know what they are doing. In terms of consumer protection, what is the bureau trying to do in that KPI?

Mr. Ger Deering

We are trying to avoid complaints happening in the first instance. For example, one of the powers I have is to direct a bank to change a practice. If we see a particular practice, I can report it to the Central Bank and we can use our case studies. We publish the number of banks and insurance companies which have had more than three complaints partly upheld or upheld. Case studies and reports to the Central Bank are prepared in either of two cases. We do it if we think something is systemic and an issue across the bank or the sector generally. We do it if we think it is so egregious that, even if it happened in a small number of cases, something should be done about it.

Senator Gerry Horkan

If we hear of situations where people are being hounded by banks with phone calls six or seven times a day or 30 or 40 times a week, as we do, can the bureau tell the banks to stop? Can it direct that they only make contact once a day or once a week and only by landline? I am not saying all institutions are doing it or that it is widespread, but the committee, in its discussions with chief executives, has heard of complaints being made to some of the institutions to the effect that people who are in financial difficulties are being absolutely hounded into a state of bad mental health and, potentially, worse. Can the bureau direct the financial institutions to stop?

Mr. Ger Deering

We can. There are two issues here. One is if the customer in that situation comes to us with a complaint, we can deal with it. We could make a finding that the contact was excessive. However, what actually governs the conduct is that there are the codes of conduct which contain limits as to how many calls can be made, the times at which a person can be contacted and how and where he or she can be contacted. That includes the number of times in a month that the customer can be contacted.

Senator Gerry Horkan

Are they industry codes of conduct?

Mr. Ger Deering

No, they are Central Bank codes of conduct for consumer protection. If a person believes he or she is being harassed or is receiving more calls than allowed for under the code, he or she can make a complaint to us and we could make a finding and award compensation to that person.

Senator Gerry Horkan

In terms of direct engagement, does the office meet regularly with management and staff of the main financial services institutions in this country? Does it have quarterly, half-yearly or annual discussions with the chief executives or heads of compliance of the institutions?

Mr. Ger Deering

In the main, our engagement is with the Banking & Payments Federation, which represents all of the banks, and Insurance Ireland. As an ombudsman we prefer to try to keep our independence from individual institutions. We meet on a half-yearly basis with the aforementioned organisations, particularly in the context of the recent changes because we needed to interact with them to let them know the changes were happening and to explain to them what we needed of them. The engagement takes place in a group setting. We might occasionally meet with a particular bank if a specific issue arises in respect of it but in general, the type of interaction the Senator has asked about is done through the representative bodies.

Senator Gerry Horkan

In regard to Insurance Ireland, I am sure Mr. Deering is aware of the committee's in-depth discussions and report on motor insurance. Does the office deal with motor insurance queries?

Mr. Ger Deering

Yes.

Senator Gerry Horkan

What percentage of its overall workload relates to motor insurance?

Mr. Ger Deering

It is slightly less than on the banking side. Less than half of our business is insurance-related.

Senator Gerry Horkan

I am asking specifically about motor insurance.

Mr. Ger Deering

I do not have to hand a breakdown in that regard. I will come back to the Senator with that information if we do not have it today. We also deal with health insurance, travel insurance and so on.

Senator Gerry Horkan

Thank you. The annual budget for the office is approximately €6 million.

Mr. Ger Deering

That is correct.

Senator Gerry Horkan

Is that sufficient and does the office have sufficient staff? I note Mr. Deering mentioned the UK figures earlier. Obviously it has a bigger population than we have and, therefore, different requirements. Is he satisfied with the financial and staff resources of the office?

Mr. Ger Deering

I would be surprised if anybody who appeared before a committee would ever say they are happy with the resources they have. That said, we are working through a new system and at this stage we are not sure what exact resources we need. We are keeping the matter under review. If we need additional resources, we will make the case for them.

Senator Gerry Horkan

I thank Mr. Deering for his responses to my questions.

Deputy Maurice Quinlivan

I thank Mr. Deering for his presentation. I am substituting for Deputy Pearse Doherty who was unable to make it to the meeting. I am sure the office will need more resources and will be making a request in that regard to the Minister.

I note the work of the office thus far on the tracker mortgage issue. While, without doubt, it has been valuable to consumers and so on, some of the contacts we received recently were not exactly universal praise for its actions in that regard. Mr. Deering said that from 2009, the office upheld complaints on the tracker issue. Was there a trickle or a stream of complaints at that stage in 2009 and does Mr. Deering believe his office escalated the issue quickly enough once a pattern emerged or does he believe in retrospect that it should have rang the alarm bells sooner? In regard to Mr. Deering's statement that following his appointment he commenced a comprehensive analysis, should that process have been commenced earlier by the office?

Mr. Ger Deering

In terms of tracker mortgages, in some respects this issue caught a lot of people by surprise as it developed. On the issue of complaints, at that stage the office was getting approximately 8,500 complaints, which was double the amount it had been receiving up to then. It probably would have been easy enough to view that as part of the overall collapse in the economy. I cannot comment on whether that should have been done earlier. When I was appointed I saw it as a priority. The exercise has been a very valuable one. The Central Bank has acknowledged that it has been useful to it.

Since taking up office my aim has been to ensure that anybody who makes a complaint to the office, whether before or since my time, gets exactly what they are entitled to and the maximum back, particularly from this redress programme.

Deputy Maurice Quinlivan

Mr. Deering also referred in his presentation to the number of complaints received. How many of those were from people who were denied a tracker mortgage? Was that the issue in terms of the bulk of the complaints received?

Mr. Ger Deering

There could be other issues also. Sometimes there are a number of elements to a complaint. Of the figure I gave earlier, the vast majority would be, I think, related to tracker mortgages. To be clear, the tracker mortgage complaints data include communications from people who would have liked to have been offered a tracker mortgage but were not. If a tracker mortgage was not an offering at the time, then a complaint of not being offered one is unlikely to be upheld. Within the cohort mentioned are a significant number of people who thought they should have been given a tracker mortgage but who did not have a contractual entitlement to it.

Deputy Maurice Quinlivan

They made a complaint but it was not upheld.

Mr. Ger Deering

Yes. The only way that can be determined is to investigate each complaint and adjudicate on it. It is not known until the end of the process whether a complaint will be upheld. We are careful to ensure that all complaints go through the system. I have heard the tracker issue described as a simple one but that is not the case. I know this having examined over 500 complaints that came through the office in respect of which the terms and conditions were different. The committee may recall that in one case a High Court judge commented on the complexity of the terms of conditions of a contract.

Deputy Maurice Quinlivan

A number of people affected by the tracker mortgage issue have raised with many Deputies their concern that where a bank offers as an excuse the loss of documentation, the ombudsman's office has accepted that excuse. Does the office have the power to search the banks in such cases and is Mr. Deering aware of any pattern around missing documentation?

In another case, when a complainant accessed her own data, it revealed gaps in what the bank had provided and also that the ombudsman's office had done no calculations on what might be due. Is that common practice? What would be the response of the office if a bank offers as an excuse the loss of a crucial document? Would that hinder the power of the office to find against it?

Mr. Ger Deering

I acknowledge the problem referenced by the Deputy. For example, I am aware of complaints to the effect that a record of a particular telephone call was not available in evidence. If evidence of a telephone call or correspondence is not available, the word of both people comes into play. The word of the bank official is worth no more than that of the complainant. In my view, it is incumbent on financial service providers to keep proper records and to retain them. I have been very strong in making that point to service providers. On occasion, where they have not provided information, I have reminded them of the office's powers to enter and search the institution for them.

Deputy Maurice Quinlivan

Has that power ever been exercised?

Mr. Ger Deering

No. I have also reminded the institutions of the powers we have to prosecute. I am not happy with how the banks have always reacted to the office. As I mentioned earlier, I met the banks, collectively, in January 2016. I also met them again later that year. I have made it absolutely clear to them that it is not satisfactory for them not to provide us with sufficient evidence. I have gone back to them on several occasions on the issue of evidence. I will use whatever powers are available to me to get that evidence.

I referred earlier to correspondence I received, which is in the public arena, from which it was obvious what the bank was doing. An element of this is that the banks were looking at the ombudsman's decisions and rather than admitting that they got something wrong, they appeared to be looking to what was the least they could do to not to have another ombudsman's finding against them. That is not what the role of the ombudsman is about. We expect banks and financial institutions against which we make a finding on behalf of a complainant to put right that wrong for all customers and not only for the complainant. In other words, if there are ten other customers in the same situation they should also rectify the position for them.

I know the committee is aware of the distinction between the regulator and the ombudsman's office but it is important for me to point out that we can only deal with the individual complaint before us. In regard to the Deputy's question on the powers of the office to enter an institution, we can only do so to look for evidence in respect of a particular complaint.

Deputy Maurice Quinlivan

It has also been pointed out to the committee that the PTSB appeal process is a bit of a joke. Does the office have the power to step in if an appeals process is being used as a delaying tactic?

Mr. Ger Deering

No. If a complaint is being considered by the office and a court case is initiated, we have to cease our consideration of it unless we believe the financial institution took the case in order to frustrate our process. In that case, we do not have to stop the investigation. We are subject to a High Court appeal. Once somebody takes a High Court appeal there is nothing we can do in that scenario.

Obviously, when it goes on to the Supreme Court, we are still caught in the same space.

Deputy Maurice Quinlivan

The bureau representatives probably have a better oversight than any of us of the scale and nature of the problem. My final question on tracker mortgages relates to whether the bureau is under any obligation to report any of these issues to An Garda Síochána or any other enforcement body.

Mr. Ger Deering

I have not yet come across anything of that nature.

Deputy Maurice Quinlivan

Mr. Deering referenced the motion of my Sinn Féin colleague, Deputy Pearse Doherty, as well as the Government position on producing legislation to tackle the six-year rule. The Sinn Féin legislation is on Committee Stage. The proposed Government legislation went through pre-legislative scrutiny but we have heard nothing about it since. There are differences in the two approaches. The Government legislation is broader in that it merges the Financial Services Ombudsman with the Pensions Ombudsman. Deputy Pearse Doherty's legislation is simply to remove the six-year rule. My view is that the committee should deal with it as soon as possible. Would the Financial Services Ombudsman welcome this change being made as soon as possible, in other words, that the six-year rule would be removed? Mr. Deering has spoken about upholding tracker cases from 2009 onwards. Every day, more and more cases are falling from the remit of the Financial Services Ombudsman because of the six-year rule. Is that the case?

Mr. Ger Deering

Yes, that is the case as time moves on. Tracker mortgages were at their height in 2007 and 2008. Depending on the length of time a person went on a fixed rate, the time he or she came off the fixed rate could be critical. Deputy Quinlivan is correct. As time goes on, fewer tracker mortgage complaints will be able to come through our office. The real complexity around the removal of the six-year rule is the extent of retrospection. I am unsure of the extent at this stage. It is a complex area. The answer to the question in simple terms is that we would welcome the removal of the six-year rule.

Chairman

Mr. Deering and Ms Cassidy are very welcome. I wish to clarify matters relating to individual cases. However, I will speak in general terms and I will not mention any details. In dealing with Ulster Bank, How would our guests characterise the dealings of the Financial Services Ombudsman with Ulster Bank? Is one bank more awkward than another?

Mr. Ger Deering

Our investigations are required to be done in private under the legislation. This makes it difficult for me to discuss. If I answered the second half of that question, it might help the committee.

There have been problems across almost all banks. I come back to the comment I made earlier, namely, that the approach certainly has improved. I have looked back and carried out the analysis of the approach and the response to tracker mortgages. The approach seemed to be a question of the least the bank could get away with to keep the ombudsman off its back. To me, that is not in any way within the spirit or to the letter of the role of the ombudsman. Far more could have been done by banks at an earlier stage in terms of dealing with the ombudsman's office. The findings from the bureau should have alerted the banks to the fact that there was a problem that they needed to rectify.

Chairman

Were any tracker cases settled earlier? For example, were there cases where the client was active and engaging with the bank and demanding a settlement? Has the Financial Services Ombudsman discovered how settlements were calculated in the early part of this saga? Is there some calculation used by the Financial Services Ombudsman? Is there some calculation used by the bank?

Mr. Ger Deering

Well the calculation we use is based on putting the borrower back on the correct rate and back in the space where he or she should have been. As I mentioned, if cases were rectified quickly or at the early stages, the compensation would not have been as great an issue as it might be today. If a borrower has been on the wrong rate for a year, it is bad, but not nearly as bad as the implications of being on it for a long time. Let us suppose we were examining a case today. Several questions arise. What is the correct rate the borrower should have been on? When should that have been applied? How much has the person lost? This is what I call the rectification aspect of our work. Rectification involves putting a borrower back in the position that he should have been in. The compensation element is completely separate. What hardship has the change caused to the person? That area will take a great deal of work because it differs for different people.

Sometimes we only hear about the people in arrears. It is awful that people got into arrears and lost their houses. However, other people may have made significant choices. They may have avoided mortgage arrears but many other things might have had to go by the wayside. This is a complex area.

Chairman

There are cases where the argument has been settled and borrowers were offered some sort of solution. However, that solution fell short and the borrower subsequently made a complaint to the Financial Services Ombudsman. Can the ombudsman take on that complaint, even though it is historical, if satisfaction was not gained by the client? Can the Financial Services Ombudsman reopen such a case and argue for a better resolution?

Mr. Ger Deering

This is a complex area. It is possible that, if we have not made a finding in the area already, it is something we could look at. We would have to determine whether any settlement was full and final and whether such a settlement would stand up. We are especially mindful now, in the context of our dispute resolution process, that people can go into mediation and get a suitable outcome without having to worry about the legislative and contract aspects of it.

The Chairman raised an important point which, perhaps, did not emerge earlier. It is our view that many cases were settled in the earlier stage on the basis that the bank had got a finding from the ombudsman and that if someone was heading towards the ombudsman, then the bank would have settled. However, that begs a further question. The banks should not have had to wait for a complaint to be made for that to happen.

Chairman

Yes. The question I am asking is relevant for such individuals. These cases have stretched over a long period. Borrowers did not get answers or had to wait six months for an answer. Then, they had to try to engage with the ombudsman before going back to the bank. Issues remain to be resolved in some of the cases I have seen. If individuals go back to the Financial Services Ombudsman in respect of these cases, will the ombudsman look at them?

Mr. Ger Deering

We certainly will look at them. Each case will turn on its merits in respect of how much we can do. In any event, we will talk to all those people.

Chairman

A second matter happens to involve Ulster Bank again. I do not intend to go into the detail of it. Let us suppose Ulster Bank has sold on a debt to a vulture fund and the debt includes a family home, the associated mortgage of which was not in arrears and did not have issues. Let us assume the client had no input in terms of the transaction between Ulster Bank and Cerberus. What rights go with the loan? What obligation is on Cerberus to acknowledge the original deal done with the bank?

Mr. Ger Deering

Can I take that generally?

Chairman

Yes.

Mr. Ger Deering

The good news is that, under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, everything travels with it. In other words, if a bank sells a loan on to any organisation, we can still consider a complaint in that regard. Indeed we have dealt with some complaints in such situations and we have ended up with two separate complaints. There might be a complaint about the conduct of the bank before it sold the debt or in respect of how it sold the debt. For example, I have come across situations where banks have sold loans without even telling the consumer. The first the consumer knew of it was when someone new turned up. That behaviour is completely unacceptable. We can also examine the entity that takes on the loan because all the same codes and protections apply. Whatever the contract states, the arrangements continue to apply. The new owner of the debt cannot unilaterally change the contract. Second, all the consumer codes apply because of the Consumer Protection (Regulation of Credit Servicing Firms) Act.

Chairman

Therefore, there is much work that the Financial Services Ombudsman can do on behalf of a client who brings such a complaint to the bureau. Is that the case?

Mr. Ger Deering

The issue of why people might be asking that question arises. It is important to outline the position. There was a hiatus before that legislation came in and people were in a certain limbo. Now, there is absolute clarity. We can deal with a complaint in that scenario.

Chairman

Has the Financial Services Ombudsman received any complaints linked to Global Restructuring Group Ireland?

Mr. Ger Deering

I cannot comment on individual complaints.

Chairman

Has the ombudsman received any? Does the bureau deal with complaints relating to that group?

Mr. Ger Deering

The answer is absolutely that we would have, if there are complaints. Once a firm is regulated for conduct of business or regulated by the Central Bank or the Consumer and Competition Protection Commission, we would have.

Chairman

The reason I say that is because representatives from Ulster Bank appeared before the committee and we discussed Global Restructuring Group Ireland. It is not an individual case, there are quite a few involved. It has been claimed that good debt, with bad, was thrown into a vulture fund without anybody being told about it, in the absence of prior discussions and with very little lead-in time. Is Mr. Deering saying that in such circumstances he can take up the general issues-----

Mr. Ger Deering

We can.

Chairman

-----and people can feel confident that this is confidential between the Financial Services Ombudsman, the bank and the party concerned?

Mr. Ger Deering

Absolutely. One of the main benefits of the mediation is confidentiality. Ms Cassidy may want to say something.

Ms Elaine Cassidy

I want to come in there. I would say we can hear those complaints. What we found to date is that many complaints of that type tend to come from small businesses, small and medium enterprises and farmers. They do not necessarily realise that they are consumers within the very generous definition provided in the legislation. They would all be entitled to come to the Financial Services Ombudsman but they do not necessarily know that. It is good news to get out there that they are entitled to do so.

Chairman

They are entitled.

Mr. Ger Deering

Any business, club, body, charity with a turnover of less than €3 million can also come to us. As Ms Cassidy states, it is not always realised. Many think only an individual consumer can come.

Chairman

Should that €3 million threshold be changed?

Mr. Ger Deering

I would say that it is generous enough. It is turnover. That lets a lot of people in.

Chairman

I seek clarity on insurance. The Financial Services Ombudsman takes in the various complaints received in respect of insurance companies. How does that role differ from the Central Bank's consumer protection role?

Mr. Ger Deering

The simplest way to describe it is that the Central Bank is the regulator in the sense that it makes the rules. If the Central Bank finds a problem, it conducts an enforcement activity across the entire organisation or the entire industry, whereas we deal with individual complaints. We cannot act unless we have a complainant. Whereas the Central Bank could go in and conduct a broad sweep about something, I suppose we are more responsive. It is only where we have an individual who has a complaint against an institution that we can act.

Chairman

Can Mr. Deering tell me about insurance, particularly flood insurance? Where a client receives a quote and is given a premium, he or she cannot accept because the premium has to be paid upfront in circumstances where the insurance company does not arrange payment over a period of nine or 12 months. What does the Financial Services Ombudsman do about that?

Mr. Ger Deering

There is possibly little we can do about that. We cannot interfere with the commercial discretion of a company. What we would say in those situations to people is to look around to see whether there is a company from which they can get their insurance and for which they can pay in instalments. I would not see us saying to a company that it must put a credit arrangement in place.

No more than politicians, I am sure, we have received a huge amount of calls about the increase in insurance premiums in recent times. I am not saying that we cannot deal with them. We could deal with certain aspects. Sometimes it is because the person's no claims bonus has not been correctly dealt with but we cannot help on the actual rate that an insurance company charges.

Chairman

It is the payment method as well. People cannot afford to pay. Some of the premiums are colossal. There have been steep increases year on year.

Mr. Ger Deering

That is correct.

Chairman

Is there nothing that the Financial Services Ombudsman can do to force an insurance company to accept payment for a premium on the basis of direct debit over a period of nine or 12 months?

Mr. Ger Deering

I do not believe we could stretch that far.

Chairman

What would make the companies stretch that far?

Mr. Ger Deering

One would hope that, on one level, consumer pressure would play a part or that if certain companies offered the option, then others would move. I do not know that anything beyond that can be done.

Chairman

Without doubt, there are cartel-like activities going on in the insurance sector. If competition in the market is not introduced in terms of premiums being accepted over a longer period and without an upfront payment, it will forever be the same.

Mr. Ger Deering

The Competition and Consumer Protection Commission has been doing some work. Indeed, it has been before committee to discuss it.

Chairman

Where a consumer is taking out an insurance policy and paying the premium, there is not that much difference in the amount involved year on year. I accept that increases are evident but the customer will have been with the company for a while. If there is a change in the policy - regardless of how big or how small - is the insurance company obliged to tell the customer? I have received a number of complaints regarding insurance policies that are not necessarily the policies originally taken out. There are certain subtle differences in how each section is worded or presented, which mean that a person is no longer covered for something for which he or she was covered in the beginning. Has Mr. Deering come across anything like that?

Mr. Ger Deering

Yes. The answer to the Chairman's question is that the insurance company is obliged to draw the attention of the consumer to it, on renewal or at any time it makes such a change, under the consumer protection code. The information that insurance companies give is, probably, in terms of insurance, one of the biggest difficulties that we deal with. The issue is around it being clear. We had a discussion in our office yesterday. Something on which I will be engaging with the insurance companies, for example, is when people take out health insurance or travel insurance and they are asked do they have pre-existing conditions. Any of us here could have a conversation about pre-existing conditions. What I think a pre-existing condition is may be different to what somebody else deems it. That is okay. The person states he or she does not have and he or she travels. Then, in six months or a year, something happens, one makes a claim and one is told, "You had an X-ray five months before you travelled which has now shown up that you have a condition." We believe, particularly in phone calls and in written correspondence, there is an onus on insurance companies to explain in detail.

Chairman

Can the Financial Services Ombudsman make them do that and to explain what is involved in layman's language so that the customer does not become lost in the course of the explanation?

Mr. Ger Deering

We can uphold a complaint. I can make a direction that they should not present this information in such a way. Coming back to the point I made earlier, I can only look at the individual complaint and the behaviour there. The Central Bank, as the regulator, would set out the parameters and what they are required to give in terms of information. We then would check to see have they abided by that code.

Chairman

If the Financial Services Ombudsman makes a finding against the insurance company, is it obliged to take that finding and apply it, not only to the client but to everyone?

Mr. Ger Deering

Yes, if I make a direction in respect of that particular aspect of it and if it affects that complaint. I can only make a finding or a direction. For example, last year, I dealt with an insurance claim where there were certain provisions in the policy which stated what it would do in the event of something happening. The person had to claim on the policy and was told that the company did not do that anymore. I directed the company to take that out of its future documentation but I also reported that to the Central Bank for fear it would be something that is happening more broadly. The distinction I am trying to make is that I cannot make a broad sweeping regulation that applies across the board.

Chairman

I understand that.

Mr. Ger Deering

That is the role of the Central Bank. However, I can direct an individual company. In many respects, our relationship with the Central Bank is good. Us feeding that information back there can have a broader effect because we can only direct it to the company that we are dealing with on that particular complaint. In insurance, information is critical.

Chairman

I have one other question regarding the banks. The banks administer European funding to small businesses at a special rate. When an application for that type of funding is refused, it is referred back to another State agency for its view on the reasons it was refused. Where that State agency indicates that the small business should get that loan but the bank continues to refuse, is that an issue for the Financial Services Ombudsman?

Mr. Ger Deering

The only part that would be an issue for us would be the conduct of the bank during that process. We certainly would not be able to state that a person should have been given a loan. We are not in the space of assessing people's repayment capacity. The Chairman is referring to the Credit Review Office.

As I understand it, it makes a recommendation that the bank should pay that money. The significant difference is that our findings are legally binding and can only be appealed to the High Court but we do not second-guess the commercial discretion of the bank. In other words, we do not decide that somebody should have been given a loan but we could look at the process to see if everything was considered and whether the way they were dealt with by the bank was reasonable.

Chairman

On the tracker mortgages issue, is Mr. Deering satisfied that the banks are taking it seriously enough and allocating the staff to deal with the issue to bring about early conclusions for their clients who have been badly treated, both in terms of their final conclusion that they were wrong and that an amount of compensation is required? Is Mr. Deering happy that they are giving the required attention to the resolution of all of these cases?

Mr. Ger Deering

My answer to that at the moment is that I do not know. The banks are doing what they are doing and I would hope we will start to see the results of that in the coming months. It is only when I get the documentary evidence of what they have actually done in each individual case that I will be able to say whether I was happy with how they dealt with that. I appreciate there are two issues going on here because the Central Bank is also overlooking all of that but we are completely independent and separate and will be looking at that process separately. Currently, we have no visibility inside that process. It will not be until we start to see the outcome, and we will be dealing with the fallout of that in terms of individual customers.

Chairman

I want to return to a point and ask a different question on it. Where a loan is sold on to a vulture fund, it is done with all of the obligations to treat the customer the same way and so on. Has the ombudsman any role in cases in which a loan was taken out with a sub-prime lender?

Mr. Ger Deering

It would depend on whether the sub-prime lender is regulated. I would be surprised if it was not. Anybody in that space now should be regulated, so the answer is "Yes". Once the lender is regulated, we can accept a complaint.

Chairman

Complaints from those who end up dealing with vulture funds, in terms of the way they are treated and the telephone calls they receive, all come under Mr. Deering's remit.

Mr. Ger Deering

Absolutely. One of the most important parts of our evidence is actually listening to those telephone calls. We listen to the recorded calls and we can glean a lot of information about and understanding of the position the complainant was in and how they were treated.

Chairman

That is important because when we asked representatives of some of these funds to come before the committee, they refused. Obviously, they do not like anyone looking over their shoulder so it is important that people would know that Mr. Deering's office can take up at least some of those aspects.

Mr. Ger Deering

Yes.

Chairman

Does Senator Horkan wish to contribute?

Senator Gerry Horkan

I just want to thank the committee. We dealt with the new set up and operations within the proposed merged entity and also the tracker mortgages comprehensively this morning. I thank both witnesses for all their efforts and I look forward to further engagement with them in the coming months.

Chairman

In closing, can I ask about all that is mentioned in legislation to empower the ombudsman's office to pursue matters? Is Mr. Deering happy that he has everything he needs to deal with these complaints?

Mr. Ger Deering

We have very extensive powers, which is very good. I am not aware of another ombudsman with the same powers as the Irish Financial Services Ombudsman. Our findings are legally binding. We have significant powers of investigation and of requiring financial services providers to produce the evidence, and sanctions if they do not. We are happy to say that the Department of Finance has engaged very well with us. There are some new provisions in the legislation. The six-year rule has been discussed a good deal but, for example, there is also a provision in the legislation that our findings would be published. We would be very happy with that. We believe that would be the greatest step in terms of transparency. The idea would be that they would be published anonymised so one would know the financial services provider against which the complaint was made and would see our outcome but the complainant would have confidentiality.

Chairman

Is there anything we can do as legislators to improve the strength and efficiency of Mr. Deering's office, bar throwing money at it?

Mr. Ger Deering

Even in terms of throwing money at us, we are actually funded by the industry and not from the Exchequer. The Financial Services Ombudsman Council sets a levy on the industry so we do not look for money from the Exchequer. What would be most beneficial to us would be to have enacted the legislation currently being drafted, thereby allowing the merger to move on and the provision of the additional powers.

Chairman

Finally, I note letters received by individual public representatives, including Members of this House, regarding queries from constituents or people making a complaint about a bank will not suffice. Mr. Deering's office needs the client to come forward.

Mr. Ger Deering

Absolutely. It is worth mentioning also that the usual representation role here is a little awkward because complainants give us a lot of confidential information. It might be medical records, their bank accounts or their visa card information. Sometimes a politician will write to us making representations on their behalf. We have to be very careful and must ask them to get the person's permission when really all they might want to know is how long the process will take or how it is progressing. It is something on which we could do some work with the House. It is slightly different from the normal representation. We can only communicate with one person so it is either the complainant or their representative. I notice when politicians write to us, they do not necessarily want to step into that representational role. They are just wondering how long the process will take.

Chairman

I have received letters on many occasions and I am sure I am not alone in this regard. In the case to which I refer, the person writing the letter is crying out for help and is pointing to the fact that a particular bank made her life hell and it continues to be hell. She has not made it public because she is embarrassed and does not want her family to know about it. Obviously, one is dealing with someone who is in difficulty with the bank, has not got the necessary tools to deal with it and believes she is dealing with some sort of superpower, as the banks are described in this letter, and is not getting to where she should. I never let go those type of representations because I believe that behind them there is a story and an issue that needs to be sorted out to improve the person's life. In the case I have in mind, the woman is 73 years of age.

Mr. Ger Deering

My suggestion, and Ms Cassidy might have a different view, would be for the Chairman to get her permission to send her details to us and we would make contact. Our system is designed to be user-friendly for somebody like that woman. We can even get somebody to make a telephone call to her to see if she wants to progress. Would that be Ms Cassidy's thinking on it?

Ms Elaine Cassidy

All of our efforts in the past year have been to make it as easy as possible for people to contact us with complaints without having to use a representative or anybody else. We have an information service to help them do that and our dispute resolution service is a friendly mediation service that can talk them through, on a totally confidential basis, how to resolve it.

Mr. Ger Deering

However, we would need the Chairman, or any politician, to get her permission to give us the information.

Chairman

I understand. It is just that one does not like to see any case slip through the crack, particularly someone of that age who is feeling as vulnerable as she does. I thank Mr. Deering and Ms Cassidy for their attendance. The meeting is adjourned until Tuesday, 7 March 2017.

The joint committee adjourned at 12.19 p.m. until 4 p.m. on Tuesday, 7 March 2017.