Joint Committee on Public Service Oversight and Petitions debate -
Wednesday, 24 Sep 2014

Role and Functions: Pensions Ombudsman

Chairman

The committee is sitting in its capacity as Joint Committee on Public Service Oversight and Petitions. I remind those present to switch off their mobile phones. We are pleased to welcome today Mr. Paul Kenny, Pensions Ombudsman, who will make a presentation on the role and remit of the ombudsman and the challenges facing his organisation in light of the proposed amalgamations. He is accompanied today by Ms Joan Bray, senior investigator. I welcome them and thank them for forwarding their presentation which has been circulated to members. Mr. Kenny was appointed Pensions Ombudsman in 2003 and reappointed in 2009. The role of the Pensions Ombudsman is to investigate complaints of financial loss due to maladministration and disputes of fact or law in relation to certain pension retirement schemes. The Pensions Ombudsman acts as an impartial adjudicator and is completely independent in the performance of these functions. Many of our members are eager to hear the presentation and engage with the representatives.

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

Mr. Paul Kenny

The Office of the Pensions Ombudsman was established under Part 11 of the Pensions Act 1990 as inserted by the Pensions (Amendment) Act 2002. The object was to permit the grant of redress. Although the Pensions Board established by the Pensions Act 1990 had powers of investigation, it had no power to grant redress where a person had suffered financial loss. The Pensions Ombudsman is a statutory officer and the employees of the office are civil servants in the service of the State. The Pensions Ombudsman investigates and decides complaints and disputes from individuals about their occupational pension schemes, that is, employer-sponsored rather than personal pensions, personal retirement savings accounts, PRSAs, which were also established by the 2002 Act, and trust retirement annuity contracts. These are contracts intended for groups of self-employed people in the same type of employment. For example, the Law Society caters for solicitors who want to opt in to the scheme. These are held under trust. We award redress where maladministration results in financial loss.

The Pensions Ombudsman is completely independent and impartial. We aim to resolve complaints impartially, informally and quickly. If we cannot assist with the particular complaint, we explain why and we may suggest other avenues for resolving the matter. There is no charge to the public for the service provided. As part of the public service reform plan, the Government decided in 2013 that the Office of the Pensions Ombudsman and the Financial Services Ombudsman Bureau would amalgamate. We will address that later.

Determinations of the Pensions Ombudsman are binding on all parties to a complaint or dispute subject to the right of appeal to the High Court. I prefer less formal intervention or mediation, where possible, as it achieves faster and better results than a formal determination.

A formal determination generally leaves one party dissatisfied.

I was originally appointed in 2003 and reappointed in 2009. I was due to retire on age grounds in 2013 but was reappointed to assist with the proposed merger of the offices.

A person can complain to the Pensions Ombudsman if he or she believes he or she has suffered financial loss because of poor administration of an occupational pension scheme, PRSA or trust retirement annuity contract. Those eligible to complain are a member, a former or potential member, or someone who claims the right to be a member of a pension scheme; a surviving dependant or legal personal representative of a member who has died; a person claiming to be a member or a surviving dependant; and a widow or widower of a deceased member or contributor to a PRSA regardless of whether they claim to be dependent. If the person eligible to complain dies, is under 18, or is otherwise unable to act for himself or herself, then the complaint may be made by that individual's personal representative, or by a relative or other suitable person, including, for example, a trade union official, a public representative, an agency such as Citizens Information or MABS. Without claiming to be at a financial loss, anyone eligible to complain can refer a dispute of fact or law to the Pensions Ombudsman. Complaints are usually made against those responsible for the management of occupational pension schemes and PRSAs. A complaint may be against those who are, or have been, trustees, managers of schemes, employers, former employers and administrators, including PRSA providers.

The Pensions Ombudsman also investigates disputes of fact or law concerning pension schemes, between members and others entitled to benefit from the schemes, and trustees, managers or employers. The question of jurisdiction is to be determined by the Pensions Ombudsman and that determination is final. There is no appeal against the determination of jurisdiction.

To succeed with a complaint, it is not enough that the complainant does not agree with a decision by those managing a scheme or a PRSA. The complainant must have reason to believe that the decision was not properly made or implemented and must have sustained actual financial loss to obtain redress. Redress in this case is limited to the actual loss of scheme benefit and there is no facility to make an award for inconvenience or even expense incurred in pursuing a complaint.

Even where there is no financial loss, the Pensions Ombudsman may give whatever directions he considers necessary or expedient for the satisfaction of a complaint or dispute. No determination may be made, however, which has the effect of changing the rules of a scheme or granting the complainant more than the rules entitle him to. Neither may he substitute his decision for one properly taken under a discretionary power.

Disputes of fact or law usually arise out of a complaint of poor administration, without needing a separate investigation. Whether a complaint involves bad administration or a dispute of fact or law is for the Pensions Ombudsman to decide. He cannot investigate any matter that is before a court.

When he receives a complaint submission, the Pensions Ombudsman must then decide whether the matter is one that he can deal with. If he cannot investigate a complaint or dispute, the complainant will be told as soon as the preliminary examination of the complaint is finished. This could happen because the matter is not on the list of matters the Pensions Ombudsman is allowed to look at, or because the time limits set out in the Pensions Act have expired. If there is another ombudsman or authority that may be able to look at the complaint, the Pensions Ombudsman may seek permission to forward the details to that other body. If the ombudsman decides to investigate the complaint or dispute, the complainant may be asked for further information. Other parties to the complaint must be sent copies of the submission made to the ombudsman, and parties are required to name any other person whom they consider may be affected by the outcome of the complaint or dispute.

Generally speaking, investigations are conducted by correspondence and telephone. The Pensions Ombudsman may hold an oral hearing under oath if there are matters that cannot be ascertained from the papers in the case, if the good name of someone is impugned and he or she wants the right to clear it, or if the credibility of witnesses needs to be tested. In practice, oral hearings are rare. Statements or admissions made by parties in the course of an investigation may not be used against them in a criminal prosecution.

The amount of time it takes to investigate will depend on how complicated the matter is. When the Pensions Ombudsman is near the end of an investigation, he may give a preliminary view to all parties to the complaint or dispute. This will list the facts as they have been found during the investigation and the ombudsman's view on how he is likely to rule on the matter. At that stage the parties will have a chance to provide any further information or evidence they feel is important to the case. The Pensions Ombudsman will not give a preliminary view in all cases, only those where he feels it right to do so. He will then make a final ruling on the issue that is the subject of the complaint or dispute.

Financial redress may be awarded in a case where the Pensions Ombudsman decides that the complainant has suffered a loss of entitlement due to the poor administration of a pension scheme or a PRSA. He may make a ruling even if the complaint is withdrawn during the investigation on the basis that the person complained against has as much right to have the matter decided as the person who has made the complaint. A determination, if made, is legally binding on all parties, subject to the right of appeal to the High Court. If a determination is not complied with, action for enforcement may be brought in the Circuit Court, either by the aggrieved party or by me.

I also have power to bring prosecutions against persons who have been requested, and have failed, to provide documents or information in the course of an investigation. Failure to comply with such requests is a criminal offence under the Pensions Acts. I can also bring an action in the Circuit Court to compel discovery of information unless that information is the subject of legal or professional privilege. Jurisdiction of the Pensions Ombudsman extends to all occupational pension schemes, including those of the public service, and those responsible for the administration of schemes, including employers, trustees and a great many bodies which provide services to pension schemes.

I want to mention a few concerns and challenges. There is currently a steering group, comprising representatives of the Office of the Pensions Ombudsman, the Financial Services Ombudsman's Bureau, the Departments of Finance, Public Expenditure and Reform, and Social Protection, working on the legislative, administrative, logistical and other measures that will be needed to achieve the amalgamation of the offices. I note that amalgamation has been announced as part of the legislation programme for 2015. I believe it was announced the day before yesterday.

The legislation governing the two offices is complex and there are differences between them in terms of time limits, jurisdiction and so on, many of which will have to be retained for legal and technical reasons. The work involved in preparing for the merger will place additional demands on both offices. In the meantime we have suffered from staff shortages, as vacancies have not been filled and the number of complaints received has remained steady for the past couple of years, although the numbers are not as high as they were in 2013. I have included some statistics at the end of the submission concerning the number of complaints received.

In the context of the review, the powers of the ombudsmen are being examined in detail and, when this examination is completed, recommendations will be made on legislative changes that will be required. Currently, back-office functions such as paying bills, wages and so on are provided to our office by the Department of Social Protection. IS services and HR backup are also included. It is expected that these functions will be provided in the future by resources already available to Financial Services Ombudsman's Bureau.

The Pensions Ombudsman has absolute privilege in terms of the law on defamation in respect of any report he may publish on an investigation. However, case studies published in annual reports of the office are drafted in a manner which protects the anonymity of parties. This is because if there is too much detail, it is too easy to identify a person, particularly in Ireland. The office is subject to the Freedom of Information Acts, but the files concerning examination and investigation of complaints and disputes are exempt. I am, however, concerned about attempts by some individuals to use data protection legislation as a back door to getting information that they could not obtain under freedom of information and which has been given to us in the course of an investigation on a strictly confidential basis. Such information can be very sensitive from a commercial and personal point of view.

The budget of the office is small at about €1 million. Of course, the gross cost is more if one takes into account the work the Department of Social Protection does for us. Approximately 70% of the €1 million goes on staff costs. A major item is legal expenses, which cannot be predicted in advance because we cannot determine who might appeal against us. So far we have won most appeals taken against us and costs recovered have been paid directly back to the Exchequer. Some costs may not be recoverable, such as when a lay litigant brings an appeal and does not have the means to pay legal costs.

I am also concerned about the number of appeals brought by arms of the State against determinations because, regardless of the outcome of those appeals, the costs of both sides have to the borne by the taxpayer. I will be happy to respond to any questions members of the committee may wish to put to me.

Chairman

I thank Mr. Kenny.

Deputy Noel Harrington

I thank the ombudsman for his presentation. It is informative and, as a public representative, I find it important. It is something which comes to our attention from time to time, in particular after the crash when many funds did not perform and many people lost quite a lot of savings and their futures. The loss in the value of pensions is something about which we often hear complaints but that is the nature of the industry. The ombudsman is focused on maladministration. Obviously he will refer any criminal activity in regard to pension funds to the authorities, but has he come across-----

Mr. Paul Kenny

There are two elements of criminality. One is outright fraud which would of course be immediately referred to the Garda fraud squad if we suspect it is happening. There are other technical crimes. Any breach of the Pensions Act is a criminal offence and may be prosecuted by the Pensions Authority which has the power to levy civil penalties or fines for certain scheduled offences. It also has the power to bring prosecutions in the District Court or through the Director of Public Prosecutions in the Circuit Court if the case is serious enough. It has brought a number of prosecutions, in particular in cases where contributions have been deducted from pension scheme members and retained or misappropriated by employers and not remitted to pension schemes. That was notorious in the construction industry in the early days of my office and the collapse of the construction industry in the wake of the general collapse in the economy aggravated the problem because quite a number of the firms involved went into liquidation or simply threw away the keys and walked. Quite a number of people have been out of pocket as a result.

There have also been a number of tragic cases involving building workers who have died and, because their contributions were not up to date, their families did not receive the mortality benefits they were due. In the course of our investigations we have come across a number of cases where people have tried to fool us as to their past behaviour. One such firm, which we found against, went so far as to ask for a judicial review in the High Court and we have reported in an annual report that Mr. Justice Hedigan said that the conduct of the applicant, namely, the building firm in question, had been characterised throughout by fraud and deceit. We have had quite of number of such cases. The non-remittance of contributions is not confined to the construction industry. There have been instances of it elsewhere but, I am glad to say, not too many.

Deputy Noel Harrington

I refer to sanctions. The ombudsman can make redress where there is a financial loss, but it has powers where there is no financial loss. Does that include sanctions against the trustees of a pension fund?

Mr. Paul Kenny

No. If I felt the trustees had acted improperly and should be removed, I would refer the matter to the Pensions Authority because it has the power to apply to the High Court to deal with that and for the replacement of trustees where it believes they have not acted properly. We do have the right, which I did not mention in my presentation, to exchange information with the Pensions Authority, and we do this regularly. If we believe something of a more general nature is going wrong in connection with the administration of a scheme, we will report it to the Pensions Authority because we take individual complaints.

Complaints of a more general nature about what is called in section 18 of the Pensions Act the state and conduct of the scheme are a matter for the Pensions Authority, which has very wide powers of investigation. It can crash-land into an office during office hours and remove computers without notice. It has to get a warrant to enter a private dwelling but its powers of investigation are significant. It has used them on occasion when it believed widespread fraud was being committed in regard to a scheme. There are powers in place and we would not hesitate to report that to the authority. We also, incidentally, have the power to exchange information with the Revenue Commissioners.

Deputy Noel Harrington

Mr. Kenny stated in his presentation that he is concerned about the increased number of appeals taken by State agencies. I am annoyed that State agencies are taking appeals against his office which, as he said, creates a double whammy in terms of costs for the taxpayer. Whatever happens will cost the taxpayer money. He mentioned that his office has won appeals.

Mr. Paul Kenny

The two most recent appeals were brought by semi-State bodies. The active appeals currently before the High Court involve a number of Government Departments. I can see why some of them are made. There may be a fear that undesirable precedents have been created by determinations in favour of individuals, but I cannot take that into account in making a determination. I only have to determine whether a particular individual has been treated fairly.

Deputy Noel Harrington

As Mr. Kenny noted in his presentation it would be a cause for concern for those who are responsible for taxpayers. We have a responsibility and duty towards taxpayers. Would it be appropriate for Mr. Kenny's office to take that further or is it sufficient to note it in a presentation or as part of an annual report?

Mr. Paul Kenny

I am due to have some discussions with the Department of Public Expenditure and Reform next week. I hope that will form part of the discussion. It is something which bothers me considerably. I have to defend a determination; I have no choice. If I did not defend a determination, I might as well hang up the key and walk.

Deputy Noel Harrington

I understand. I refer to the amalgamation of the office with the Financial Services Ombudsman. Mr. Kenny mentioned it is on the legislative programme for 2015. Would he regard that as slow progress or is he under pressure with regard to the merger?

Mr. Paul Kenny

The initial decision was taken in early 2013 but there was a question over who would run with the legislation because there are two Departments involved. We operate under the Department of Social Protection and the Department of Finance is responsible for the Financial Services Ombudsman. Its legislation is part of the Central Bank legislation and, quite honestly, it is more complicated than ours which is shorter and much simpler than the legislation which governs the Financial Services Ombudsman. We will have to retain certain differences even after the merger is complete because we can look back much further than is possible under the ordinary law of contract which governs most of the activity of the Financial Services Ombudsman.

A steering group has met. We are currently actively working and have split into sub-groups. The Departments of Finance, Social Protection and Public Expenditure and Reform and the two ombudsman offices are doing other work together. We are trying to expedite this because my last contract expires in mid-2015. The current contract of the Financial Services Ombudsman expires, I understand, even earlier. There is now an urgency about it.

Progress is being made, and we are very pleased with how easily that progress has been achieved so far. Nobody has been dragged kicking and screaming from the room in protest about what is happening. We are all very happy to try to make this work, but my concern is that we have lost a number of staff during the period of uncertainty, because this uncertainty has been going on since Colm McCarthy first mentioned it way back and it has been hanging over our heads since then. If anybody got a chance of getting promotion elsewhere, they probably took it, and we lost a number of people whom we have not been able to replace.

Senator Susan O'Keeffe

In aligning the two offices - Mr. Kenny mentioned the various sub-groups, committees and the work he has to do - will they have similar approaches as Ombudsman's offices or are they substantially different, and will we see something substantially new in terms of ethos?

Mr. Paul Kenny

The history of the two offices has been different because much of the work of the Financial Services Ombudsman concerns issues which are contractual as between parties, so it will be dealing with insurance policies, bank matters and the like, which are the subject of contractual relationships between the parties. What we deal with is much more nebulous, and the people in our jurisdiction include employers, for example, which range from Frisby & Co. with two employees to the ESB, and they all have different needs and different ways of operating. Trustees can range from individual small companies to professional trustee companies, and in between there will be groups of individuals appointed as trustees, including member trustees of the larger pension schemes and so on. The parties we deal with are very different and if the problems we have to deal with in pension schemes become fully fledged investigations, which, as I mentioned, we try to avoid if possible, they are much more complicated. The investigations sometimes go on for quite a long time because of the complexity of the issues involved.

In terms of our philosophical approach, there is no difference. We are there to serve the public and to try to give redress where people have suffered as a result of something that should not have happened or something that should have happened and did not. There are slight differences in that the Financial Services Ombudsman, for example, can make an award for pain and suffering, distress and so on; we cannot do that. There is a financial limit to the awards the Financial Services Ombudsman can make. In principle there is no limit to the award I can make; it is whatever it costs to put the issue right. Whereas we can only deal with individual members and contributors, the Financial Services Ombudsman has the power to take complaints from small companies whose turnover is under €3 million; that is the difference between us.

We would not differ significantly in our approach to the way we investigate matters. There have been appeals to the High Court which were decided differently in our two cases. I have tried to limit the operation of oral hearings as much as possible because they are extremely expensive and largely unnecessary. Only in cases where there is a dire necessity to hold an oral hearing will I do so, but some of the judgments of the High Court in the case of the Financial Services Ombudsman have suggested that he should grant an oral hearing almost on request. Some of the later judgments have toned that down somewhat, but some of the earlier ones painted him into a corner which he probably would prefer not to be in.

Senator Susan O'Keeffe

When this amalgamated office is established - one assumes the legislation will be passed, with some amendments - is it a strict amalgamation of the two businesses, so to speak - pensions and financial services - or will it be something different?

Mr. Paul Kenny

It will be a hybrid. It will almost be like a portal where we will have people who will major in pensions and people who will major in other financial services. We would hope that members of the two groups will gradually come to be comfortable in both disciplines. One of the advantages it will give us is that we will be able to investigate what currently would be portmanteau complaints. For example, if someone leaves a pension scheme and their trustees buy the person a personal retirement bond, which is that person's own property, that is now a financial product and proper to the Financial Services Ombudsman. I can look at what the trustees did before the bond was bought but I cannot look at what the administrator did after it was bought. Such issues will be much easier in future because we will not have to split the complaint. One individual inside the office will be able to look at both ends of the complaint, which currently is not possible.

Senator Susan O'Keeffe

What is the estimated cost saving to the Exchequer of this proposal? Does Mr. Kenny believe the figure will be reached?

Mr. Paul Kenny

Mr. McCarthy estimated the cost saving to the Exchequer at €1 million. I do not believe that will necessarily be the case. The work the Department of Social Protection, DSP, does for us and the rent the Office of Public Works, OPW, pays for us, to give it credit also, is not taken into account in our budget, so there will be savings in that respect because they will not be paying the rent for us in future. A great deal depends on how the hybrid operation is financed, because until now our office was financed by a direct grant-in-aid from the Department of Social Protection budget, whereas the Office of the Financial Services Ombudsman is financed by a levy on the financial services industry in general, which is fixed by the council of the bureau.

Senator Susan O'Keeffe

Is it part of Mr. Kenny's sub-committee activity that some-----

Mr. Paul Kenny

The deliberations.

Senator Susan O'Keeffe

The deliberations, yes.

Mr. Paul Kenny

I think the Department of Finance has grasped that particular nettle-----

Senator Susan O'Keeffe

I bet.

Mr. Paul Kenny

-----and I expect it will come up with a proposal which will determine the way areas are financed in the future.

There are many other bits and pieces we have to do. I mentioned that the employees of my office are civil servants within the service of the State, and the Financial Services Ombudsman's people are public servants. There are technical differences in that regard and we will wait to see what happens with those. There are many logistical issues to be worked out. The person who looks after the computer operation in the Financial Services Ombudsman's bureau will talk to our people this afternoon and examine our case management system. He knows all about the case management systems they have, and we will see how compatible they are or whether it will be necessary to run them side-by-side for a period before we can achieve a single recording system.

Senator Susan O'Keeffe

Would the new office, whenever it emerges, benefit from having a mix of civil or public servants and others from outside the Civil Service who have never-----

Mr. Paul Kenny

My understanding is that the Financial Services Ombudsman contracts out some of the investigations, mainly to lawyers. That gives them a flexibility to expand and contract as the number of complaints changes. The Senator may have noticed in our statistics that we had a larger number of complaints in 2012 than we had in 2013. In terms of files opened, we only opened 463 last year as against 601 the previous year, but in 2008, at the height of the bust, we opened 758 files. The general collapse is what triggered a spike in the number of complaints because many people left the public service, for example, and a few mistakes were made in that regard. In one exercise the Health Service Executive, HSE, lost approximately 2,000 people, but in the process of doing that it prepared 17,000 illustrations for people who wanted to know what they would get if they left.

It was almost inevitable in that context that mistakes would be made, because everything was being done in a huge hurry. My understanding is that people were working until midnight and pitching up again at 9 o'clock the following morning.

Senator Susan O'Keeffe

Deputy Harrington raised the issue of appeals taken by arms of the State. To clarify, is Mr. Kenny saying that where he makes a ruling, arms of the State can appeal that decision and take his office to court?

Mr. Paul Kenny

Yes; there is a right of appeal to the High Court, and State bodies do avail of it. It very rarely happens that a complainant will appeal, because they are usually lay people who might not have the resources to do so. Occasionally, we get a pensions administrator or trustee who decides to appeal a case. Public service appeals include those taken by semi-state bodies, two of which were lodged in the past couple of years. In fact, the last two appeals we won were brought by semi-state bodies. Of the live appeals at this time, several have been brought by Departments.

Ms Joan Bray

To clarify, appeals would only be brought by Departments where the determination related to a departmental scheme. They would not lodge appeals on behalf of an external party.

Senator Susan O'Keeffe

I understand. To be clear, then, the delegates are suggesting that whenever they have found themselves in court in recent times, it has been at the hands of the State?

Mr. Paul Kenny

Yes.

Senator Susan O'Keeffe

Are we allowed to know which Departments are involved? Is that a matter of public record?

Mr. Paul Kenny

Of the appeals that are currently live, one was brought by the Department of Public Expenditure and Reform and another by the Department of Education and Skills. We had an appeal last year from the Department of the Environment, Community and Local Government, and earlier appeals were brought by the Department of Education and Skills. There is an appeal coming up for mention on 13 October and I am a little confused as to who exactly is appealing. I understand it is being taken jointly by the Department of Education and Skills and the Higher Education Authority and relates to one of the university schemes that was moved under the auspices of the Government by recent legislation.

Senator Susan O'Keeffe

Nobody would dispute the principle of a right to appeal. However, recourse to the courts seems to be an incredibly slow and expensive process. Given Mr. Kenny's experience over years, might he be in a position to recommend another method that could be employed? As it stands, the process seems tantamount to throwing money away.

Mr. Paul Kenny

Certainly, an appeal to the High Court is quite drastic, particularly where a person is aggrieved over what is a relatively small sum. Perhaps a capacity to appeal to a lower court, with some type of limit placed on the value of the appeal, might be more expeditious. High Court proceedings do tend to be slow. In fact, one particular appeal has been going on for a long time and has not been prosecuted with any vigour by the relevant Department. It relates to a very elderly woman, and I am concerned the appeal might outlive her.

Senator Susan O'Keeffe

Have these appeals had an impact on the budget of Mr. Kenny's office? As he said himself, it is taxpayers' money that is being spent.

Mr. Paul Kenny

The arrangement we have been able to come to is that our costs will be paid for us, whether they are within budget or not. Any costs we recover - and we have recovered costs in the majority of cases - are paid directly back to the Exchequer. They do not go through our accounts at all; recovered costs are simply paid back by us to the public purse.

Senator Susan O'Keeffe

In other words, public moneys are effectively being shuffled from one point to another and then back again?

Mr. Paul Kenny

That certainly is the case where it is a public body from which we recover costs.

Senator Susan O'Keeffe

Mr. Kenny indicated that his office has been successful in recovering moneys from public bodies.

Mr. Paul Kenny

Yes.

Senator Susan O'Keeffe

It is essentially a case of shuffling money about.

Mr. Paul Kenny

The Senator should bear in mind, however, that in the meantime there are also lawyers receiving moneys.

Senator Susan O'Keeffe

Yes; there are certainly people taking their share of it. In the brave new world following the amalgamation of the Office of the Pensions Ombudsman and the Financial Services Ombudsman, there should be an opportunity for all kinds of things to change. Might there be an opportunity within that space to address this and other issues?

Mr. Paul Kenny

It certainly is something that needs to be considered. My office and the Financial Services Ombudsman are unique in the Irish ombudsman world in the sense of being able to give binding determinations, which we have to do. Trustees and other people in jurisdiction simply would not get on board if the determinations were not binding. We are obliged to try to put things right where they have gone wrong and give redress to people who are entitled to it. Other ombudsmen may make recommendations that are not binding. Indeed, the financial services ombudsman in the United Kingdom can only bind the companies in jurisdiction, not the complainants, which is an interesting idea. Where a complaint is without foundation, my view is that it is right to bind all parties, so that the person who brought the complaint does not get up to separate mischief, having had a decision given against him or her.

Senator Susan O'Keeffe

I thank Mr. Kenny for his patience; I have only a couple of questions remaining. Given that we have a variety of ombudsmen operating across a range of different areas in the State, does he see a benefit in establishing some type of unified structure? Of course, the Ombudsman for Children, for instance, is different from the Pensions Ombudsman and so on. Nevertheless, would it be Mr. Kenny's view that there should at least be a similar ground floor? Or is there already a sufficiently unified ground floor in place?

Mr. Paul Kenny

When we are amalgamated with the Financial Services Ombudsman, there certainly will be a ground floor for anybody with complaints in that broad spectrum. The Ombudsman for Children is a very special case and needs to be totally separate. The Office of the State Ombudsman has acquired a huge increase in the bodies under jurisdiction under the latest legislation and there may be further expansion in that regard. We are all members of what was formerly the British and Irish Ombudsman Association and is now simply the Ombudsman Association. It is the policy of the Ombudsman Association that, where possible, if public services are devolved into the private sector - that is, where the responsibility for a public service is retained by a public body but contracted out to a private provider - then the ombudsman should retain jurisdiction over that service. In such cases, the ultimate responsibility for providing the service will rest with a local authority or similar, even though the day-to-day provision is done by somebody else in the private sector. In other words, the service remains a public service. There is a case to be made for that approach. The issue arises much more often in the United Kingdom, where the authorities were much quicker to privatise everything in sight than we have been. However, it is happening here more and more often. If there is a possibility that some public utilities might ultimately be sold off, for example, this certainly is a matter that merits consideration.

Senator Susan O'Keeffe

Mr. Kenny referred briefly to freedom of information. Is he saying that, in his view, the documentation that is currently exempt should remain exempt?

Mr. Paul Kenny

Absolutely. My view is that we are adequately covered in terms of how the offices are run. We are completely subject to freedom of information in respect of everything except the actual investigation files. Those files contain very sensitive personal information about people's health, and everything including their PPS number and beyond is contained therein. We also receive commercial information from bodies in jurisdiction, which is also very sensitive from their point of view and should not, therefore, be accessible to the public. I am very happy that the investigation files should remain completely confidential. Apart from anything else, the job of redacting information from some of those files, if they had to be issued, would be impossible.

Senator Susan O'Keeffe

There would be nothing left to issue. Is Mr. Kenny currently of the view that there might be a problem with data protection?

Mr. Paul Kenny

I have a concern in that up to now we have not had a policy of destroying files after a particular time.

It means we have information in our files for quite a long time. People may come back years later, having decided they want to sue the Garda Commissioner or something like that, and do a trawl under the guise of data protection for information they feel may assist them in pursuit of that lawsuit. I do not think it is morally right.

Senator Susan O'Keeffe

Is Mr. Kenny recommending a change?

Mr. Paul Kenny

What we intend to do to address that is to develop a policy on the retention of files and limiting the length of time for which we hold files.

Deputy Noel Harrington

Is that not part of the data protection legislation as it stands, whereby the ombudsman must destroy information after a certain number of years?

Mr. Paul Kenny

The problem we have is that some complainants feature in our files a number of times. I received a complaint last year from a gentleman in the west of Ireland who has three previous complaint numbers, and it is useful to be able to access the previous complaints in order to deal with the current one because sometimes there is background in what was done previously. In other cases, there is documentation on file that could be useful in solving the problem under review. The number of return visits we get is fairly small, but they do happen.

Deputy Noel Harrington

Many of the files are held electronically, and I assume the Pensions Ombudsman has up-to-date security measures so that this aspect will not be compromised.

Mr. Paul Kenny

Yes, we do. There is no difficulty with that. Many of the files are paper files, but we have elements recorded electronically on the case management system. For example, there is a record of every phone call on the case management system. We save incoming e-mails to it and all outgoing correspondence is automatically saved to it. We have a paper file on every case.

Senator Susan O'Keeffe

If the deadline for the legislation is next year, is Mr. Kenny on target to reach that? Before Mr. Kenny came in, the committee was talking about all of the ombudsmen's offices. When a report is presented by an ombudsman to the Houses, the Whip can be applied and the report can be rejected. Should there be a different way to deal with all of the ombudsmen's offices? They are all supposed to have something extra and to be independent. Should there be a higher threshold for rejection of a report?

Mr. Paul Kenny

I think so, because the idea of independence is central to what we believe the ombudsman should be. I provided the committee with the Ombudsman Association principles of governance. Independence is central and we have several norms that we embrace. They are all designed to reinforce the independence of the ombudsman. As it is an independent and objective body, it is important that there be a high threshold for rejecting a recommendation of an ombudsman. My experience of ombudsman investigations in this and other jurisdictions is that the recommendations are made after thorough investigations and a dispassionate look at the facts of the cases. We do not make recommendations lightly and I certainly do not make determinations lightly. I try to solve problems, if possible, by lifting the telephone and telling people what is coming down the tracks and asking if they want to do something about it. If I must make a determination, it is a formal thing. It is not unusual for us to produce a 40-page report in the process of making a determination. It is something we take seriously and we expect it to be complied with. If it takes the High Court to say that it must be complied with, so be it.

Senator Susan O'Keeffe

It is a shame, when we might be able to make it stick through a clearer and quicker route.

Mr. Paul Kenny

Yes, and in a much less formal process.

Senator Susan O'Keeffe

It might be less expensive.

Mr. Paul Kenny

Yes; it is expensive, and it involves the sort of work we never get paid for. The work we must do in producing the file that goes to the solicitor is all done under the surface and is hugely time-consuming for us, but is never recorded as a cost.

Senator Susan O'Keeffe

If the legislation comes through as it ought to, will the ombudsman's office be ready?

Mr. Paul Kenny

Yes. The offices are talking to each other; we are paying each other visits and we are getting together to discuss practical matters such as where we will all be accommodated. There are few enough of us but there are many in the other ombudsman's office. We need to ensure there is space for everyone and such matters are being discussed and considered as part of the exercise. We are looking at it on a number of different levels, including legislation, pure logistics and financing. Work is going on at a number of different levels simultaneously.

Chairman

Mr. Kenny talked about engaging with the Pensions Authority. Is there some degree of follow-up to ensure an issue has been resolved? Is there a process of going back and forth?

Mr. Paul Kenny

The Pensions Authority generally lets us know what has happened as a result of information we conveyed. Very often we know in advance, because the Pensions Authority usually issues a press release when it has conducted a successful prosecution. We find out on the day of the verdict in the District Court that a successful prosecution has been brought. The Pensions Authority generally reports to us on how something has panned out when we refer a case to it. Likewise, we report it to the Pensions Authority if it has referred a matter to our organisation.

Chairman

Does Mr. Kenny find himself challenging or seeking clarification on decisions made by the Pensions Authority?

Mr. Paul Kenny

I do not think we have ever felt the need to do so. We sometimes get complainants who say they got no satisfaction from the Pensions Authority and ask what we are going to do about it. When a person has not been granted the desired decision, he or she can become more dissatisfied. I have been invited to send a complaint to the Financial Services Ombudsman when people say they got a good deal from the Financial Services Ombudsman the last time and have not got a good deal from us. Even though the case is not under the jurisdiction of the Financial Services Ombudsman, they would like a better deal.

Chairman

From time to time, Mr. Kenny finds it necessary to conduct a special report on a particular issue. Does he lay such reports before the Houses of the Oireachtas, or are they submitted to the relevant Department?

Mr. Paul Kenny

Generally, they are submitted to the relevant Department. I have never made a formal report to the Houses of the Oireachtas. Members receive my annual report and, in that, I try to give a flavour of the kinds of case we meet, usually putting fictitious names on the participants so they are not identifiable, because it is too easy to do that in Ireland. The only time I have named names was in the case of a company in which the conduct of the directors was so bad as to merit their being named personally. Otherwise, we try to keep complainants and respondents anonymous. There is a right of complainants to be anonymous as private citizens. With regard to the respondents, if we published details on who the respondents were, people might take the wrong meaning from the statistics. If I get a number of complaints against a particular organisation, that does not necessarily mean it is a bad organisation.

It might mean it has a bigger market share than other bodies or it might mean it is more complaint-friendly. It is dangerous to publish names in such a situation because people might infer incorrectly.

Chairman

This committee has two key remits. One is to receive petitions from the public relating to the reform of public services. We engage with those petitions and bring in witnesses such as Ministers and Secretaries General. The other remit is to engage with the various ombudsmen and support their recommendations as often as possible. If recommendations are not implemented, we follow up on that. We take this role very seriously, and a range of ombudsmen will come before the committee in the autumn and winter.

The public sees an ombudsman as an independent arbiter who is independently funded and, thus, is not beholden to Government budgets, cutbacks and so on. As Pensions Ombudsman, Mr. Kenny must have the resources he requires to hold the pensions sector to account independently. How should an ombudsman's office be perceived by the public, and does Mr. Kenny's office fit into this? Does Mr. Kenny's office need more powers?

Mr. Paul Kenny

I hope the Office of the Pensions Ombudsman meets public expectations. We would all like to be financed independently of the Government, but as things stand I am not; I receive my grant-in-aid from the Department of Social Protection. However, I must say, in fairness to the Ministers and officials I have dealt with, there has never been a hint of an attempt to interfere with how my office functions. I give full credit for this and hope it will always be the case.

Regarding appointments, I was initially appointed through the Public Appointments Service and was reappointed by Ministers. The former Minister Mary Coughlan gave the Public Appointments Service the job of finding an ombudsman. Other ombudsmen may be appointed by the President on the recommendation of a Minister or Cabinet. I think the Children's Ombudsman was appointed through the Public Appointments Service, but children participated in the process.

The governance principles of the Ombudsman Association - independence, integrity, accessibility and so on - should apply to all ombudsmen. It is important that these principles are applicable, though changes might be required in the appointment process and terms of office. I think a fixed minimum term is a good idea, and the Ombudsman Association states in its documentation that a minimum term of five years should be recommended.

Senator Susan O'Keeffe

Mr. Kenny spoke of the arms of the State and the renaming of the British and Irish Ombudsman Association. Has the experience in Britain been similar and do arms of the State there take ombudsmen to court?

Mr. Paul Kenny

The British Pensions Ombudsman has not been taken to court very often, to my knowledge. He is the only ombudsman there who, like me, has jurisdiction over public service and private sector bodies. As in Ireland, the British Financial Ombudsman deals solely in the private sector. I am sure public service bodies have been involved in appeals in Britain but I am not familiar with such cases.

Senator Susan O'Keeffe

Could Mr. Kenny send a note clarifying this to the committee?

Mr. Paul Kenny

Certainly.

Senator Susan O'Keeffe

It would be interesting, because we can draw from the experiences of British ombudsmen. I should have raised this earlier because it could be useful. Is it easy to get this information?

Mr. Paul Kenny

Yes, it is easy, and we will pass that information on to the committee.

Chairman

I have no more questions so, on behalf of the joint committee, I thank Mr. Kenny and Ms Bray for their attendance and for engaging in an interesting and wide-ranging discussion. Their frankness and experience on the challenges involved in amalgamation were very helpful. Later in the year this committee will report on the overall picture regarding ombudsmen, and perhaps the legislation could be strengthened.

Senator Susan O'Keeffe

I second the thanks expressed by the Chairman, as the witnesses have been very helpful. Their clarity is appreciated.

The joint committee adjourned at 5.40 p.m. until 4 p.m. on Wednesday, 1 October 2014.