Thank you Chairman. I am pleased to have this opportunity, together with my colleague Ms MaryRose McGovern, deputy Financial Services and Pensions Ombudsman, to engage with the committee today on the general scheme of the Financial Services and Pensions Ombudsman (Amendment) Bill which was published by the Minister for Finance in April.
The Financial Services and Pensions Ombudsman, FSPO, was established on 1 January 2018 under the Financial Services and Pensions Ombudsman Act 2017. The principal function of the FSPO is to investigate complaints made by consumers, including small businesses and other organisations, against regulated financial service providers and pension providers. Section 12 of the Act requires the investigation of complaints in an appropriate manner proportionate to the nature of the complaint, including by informal means, mediation and formal investigation, including oral hearings if required.
When consumers are unable to resolve a complaint or dispute with their provider, they can refer their complaint to the FSPO. The FSPO provides an independent, fair, impartial, confidential and free service to resolve complaints through either informal mediation, leading to a potential settlement agreed between the parties, or formal investigation and adjudication, leading to a legally binding decision, subject only to a statutory appeal to the High Court. The procedures of the FSPO greatly encourage mediation between the parties on a voluntary basis so that every effort can be made to facilitate the resolution of complaints in a way that empowers the parties themselves to design and agree a confidential solution. This is done in accordance with the provisions of section 58 of the Act which requires the ombudsman to try, as far as possible, to resolve a complaint by mediation. The FSPO’s mediation services, made available to providers and complainants, adhere to a code of ethics which is available to the public through our website.
Mediation by its very nature is a confidential process, which facilitates discussion between the parties on an off-the-record basis. Any evidence of anything said or admitted during a mediation conducted by the FSPO, under the Act, is not admissible in any subsequent formal investigation by the FSPO, or admissible in any proceedings before a court. Where these early interventions do not resolve the dispute, the FSPO formally investigates the complaint. Formal investigation is a detailed, fair and impartial process carried out in accordance with fair procedures. It involves a full gathering and exchange of evidence and submissions between the parties to the complaint, until both parties have concluded their respective observations.
I can decide to hold an oral hearing where there is a conflict of fact in the documentary evidence made available by the parties, which cannot be resolved without hearing oral evidence from those parties. Section 47(3)(b) of the 2017 Act provides that I may require any person to attend and be examined on oath. The procedures of the FSPO, in the event of an oral hearing, include cross-examination of the various witnesses’ evidence. Our oral hearing guidelines are available to the public on our website. In most instances there are either no material conflicts of fact, or any such conflicts of fact can be resolved by reference to the documentary and audio evidence. Therefore, oral hearings are held by the FSPO in a limited number of investigations, typically less than ten each year.
On completing the investigation of a financial service complaint, I issue a decision that the complaint is upheld, substantially upheld, partially upheld or rejected. Legally binding decisions are issued by the statutory office holders, or by a staff member where there is a delegation in place to do so. A financial service complaint can be found to be upheld, substantially upheld or partially upheld on one or more of the grounds set out in section 60(2) of the 2017 Act. As outlined above, decisions are legally binding, subject only to a statutory appeal to the High Court.
In April 2021, the Supreme Court held that the exercise of powers by adjudication officers pursuant to the Workplace Relations Act 2015, as amended was an administration of justice within the meaning of Article 37 of the Constitution. The Supreme Court outlined that section 41(13) of the Workplace Relations Act 2015, which requires all hearings before an adjudication officer to be held otherwise than in public, to be inconsistent with the Constitution. It further held that the absence of a provision for the administration of an oath, or any possibility of punishment for giving false evidence, is contrary to the Constitution. It held that cross-examination of witnesses is fundamental to the concept of fair procedures though the absence of an express provision for cross-examination in the governing legislation of the Workplace Relations Commission, WRC, was insufficient in itself to render the Act unconstitutional, given the presumption that an Act will be operated in a manner consistent with the Constitution.
While the 2017 Act contains several provisions which recognise the quasi-judicial role of the FSPO, and the concept of fair procedures, the decision in the Zalewski case has required quasi-judicial bodies, including the FSPO, to examine their processes and procedures to ensure consistency with the Constitutional requirements. In this context, the FSPO has engaged with the Department of Finance on proposed legislative amendments that are suitable to address the issues raised by the Zalewski judgment, including a specific consultation process in respect of the proposed provisions of the general scheme. The FSPO welcomes the publication of the general scheme before you today, which includes provisions to take account of the comments made in Zalewski, and additional legislative amendments which seek to clarify my statutory powers with respect to complaints regarding financial service providers which are no longer authorised by the Central Bank of Ireland.
I will briefly discuss some key provisions in the general scheme. In the context of the statutory role of the FSPO, and taking account of the fact that confidential and sensitive personal data are generally at the heart of the vast majority of FSPO complaint investigations, we consider that it is appropriate and in the best interests of complainants in particular that a statutory amendment, as provided for in head 8 of the general scheme, must include the potential for a hearing in public, where considered appropriate, rather than introducing public hearings as the default position. Although some complainants may indeed desire a public hearing, many complainants value maintaining privacy over their financial affairs. The FSPO recognises the risk of discouraging potential complainants from making complaints against their financial service providers or pension providers, which might thereby reveal a broader or indeed potentially systemic issue or conduct. Such reticence may be because they are unwilling to risk the disclosure to the public of their private financial details. The potential impact of complainants not being willing to pursue a complaint to the FSPO could be very significant. I consider that in fulfilling my functions pursuant to section 12(1) to investigate complaints in “an appropriate manner proportionate to the nature of the complaint”, the potential to conduct hearings in public must be introduced in a manner which recognises this proportionate approach to investigations, such that I may decide to hold a hearing in public or in private, having consulted the parties.
With regard to mediation, it would be contrary to the Act, and contrary to the well-established procedures for conducting mediations, for any FSPO investigation by way of mediation to be conducted in public. Head 9 of the general scheme seeks to ensure that mediation is conducted in private to maintain the confidentiality of this important process, noting that mediation does not constitute the administration of justice.
The FSPO relies on complainants to make known their dissatisfaction with the conduct of their financial service providers or pension providers because I have no power to commence an investigation in the absence of a complaint being made by a complainant, within the meaning of the Act. It is only when individual complaints are pursued to the FSPO that the FSPO has an opportunity to examine the issues raised by such complaints and to thereby potentially identify issues or matters that may be of a systemic nature. Over the last two years my office has referred 25 matters to the regulatory authorities because of concerns that the issues noted in each such individual complaint could have a systemic impact.
In addition, the proposed amendments to sections 47(3) and 59(1) of the 2017 Act, as provided for in head 6 and head 10 respectively, address comments made in the Zalewski judgment regarding the cross-examination of the person being examined on oath, and the potential obstruction of my work. The FSPO welcomes these targeted amendments, which will better equip the FSPO in the performance of its functions.
The FSPO also welcomes the proposed amendment to clarify my statutory power to investigate complaints against a financial service provider, which was regulated at the time of the conduct complained of, even if the provider has ceased its regulated status before the complaint was made to the FSPO, or before the FSPO’s investigation of the complaint has been concluded.
Finally, with regard to head 5, the FSPO recognises the requirement for the demarcation between the processes of the FSPO and the Credit Review Office, noting that the Department of Finance is currently preparing legislation to put the Credit Review Office on a statutory footing. The FSPO considers it appropriate that this head is included to clarify that the Credit Review Office holds an entirely different role. This provision and, similarly, the proposed amendments to section 50 of the 2017 Act, once enacted, will clarify that a complainant may not make a complaint to the FSPO about a matter that falls within the jurisdiction of the Credit Review Office.
I thank the committee for the opportunity to engage with it today. The Office of the Financial Services and Pensions Ombudsman plays a vital role in Ireland’s consumer protection framework and these amendments, once enacted, will reinforce the statutory basis of the FSPO. We are guided by our values of fairness, integrity, independence, accessibility and effectiveness. These values are at the very heart of how we approach our daily work and interactions with our customers. We will be very happy to answer any questions members may have.
