Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2014: Committee Stage

The Minister of State is welcome. He is not listening to me at all. We will not talk about quotas or anything like that.

Section 1 agreed to.
SECTION 2
Government amendment No. 1:
In page 3, to delete lines 18 and 19 and substitute the following:
“ “ ‘long-term financial service’ means—
(a) subject to paragraph (b), a financial service the duration of which is a fixed term of 5 years and one month, or more, but, notwithstanding that the aggregate term of them may be 5 years and one month (or more), there does not fall within this paragraph a series of consecutive terms in respect of a financial service’s duration (provided no individual one of them is 5 years and one month, or more, in length), or
(b) a financial service that is life assurance to which, by virtue of Regulation 4 of those Regulations, the European Communities (Life Assurance) Framework Regulations 1994 (S.I. No. 360 of 1994) apply (not being life assurance falling within Class VII defined in the first Annex thereto) and regardless of whether the term of which life assurance is fixed at a specified calendar period or not;”.”.

This is a Sinn Féin amendment.

No. It says it is a Government amendment. Is that right?

It is a Government amendment.

Then there are a whole lot of amendments in Senator Conway-Walsh's name.

Sinn Féin is not in government yet.

I think there was a meeting of minds on the amendment.

I see. Forgive me.

We always welcome that.

Will the Minister of State clarify the matter?

I thank the Minister of State for coming back before the House-----

On a point of order, may we have precise clarification, perhaps through the Minister of State, as to whether the first amendment is a Government amendment?

It was a Sinn Féin amendment.

I am reading here that it is a Government amendment, and then-----

I understand. Perhaps the Minister of State might confer with his officials.

-----Senators Conway-Walsh, Devine, Gavan, Ó Clochartaigh, Ó Donnghaile, Mac Lochlainn and Warfield are listed, so Sinn Féin is obviously-----

Will the Minister of State clarify the position?

Order. As I have called Senator Conway-Walsh, will she give way in order that we get the Minister of State to clarify the matter?

To clarify the matter for the House, this is a duplicate amendment. As both amendments are similar, it is the Minister's amendment that is moved.

Senator Conway-Walsh can speak to the substantive point of the amendment then.

The amendment introduces into the Bill the new definition of a "long-term financial service". This is critical because the six-year rule change we will discuss later applies to what we define here. The amendment matches the definition accepted in the Government Bill, which overlaps, as was said, on some of these issues. It would be in no one's interest to have a rule change under one definition in this Bill that may be changed whenever the Government passes the other Bill at some time in the future. I am confident the balance struck here will allow the vast majority of those excluded by the six-year rule to reapply and get their day in the Financial Services Ombudsman process. We have also applied the change in adding the life assurance definition here as I accept there was a possible loophole here.

I thank the Minister of State for the clarification. I am not sure whether it is the first time ever we have seen a Government amendment that is worded exactly like a Sinn Féin amendment, but perhaps that is new politics. It is helpful-----

The Senator was a bit slow on the draw there.

Senator O'Donnell will have his turn.

If Fine Gael and Sinn Féin want to co-operate in power, that is their own business.

We will always co-operate for the good of the people.

That is it - like us all. The Minister of State may have been a member of the select committee at the time the Bill was being discussed. I am not sure whether he was there at the time but I do think it is a good idea that there is a definition and there has been agreement between all sides. It is to the benefit of the consumer and, ultimately, wider society that this happens, so I am pleased to support the amendment.

I welcome the amendment. This issue of the six-year rule has come up repeatedly over a long number of years. Paragraph (b) of the amendment, which deals with the matter of life assurance, provides clarity in respect of any ambiguity surrounding the issues. I note the Government Bill is due to come forth as well and that identical amendments were tabled. This is all about what is best for people, many of whom found themselves victims of circumstance whereby the time had run out before they realised the substantive difficulties they had got into over a policy. It will be welcome when we have people coming to our constituency offices to whom we will be able to say there is now scope in this regard. I have met people over a long period, certainly in Limerick, who are dealing with this issue, as I have no doubt my colleagues elsewhere have. This is a welcome amendment and I very much welcome that we have cross-party support from Government, Sinn Féin and Fianna Fáil on this matter.

This is the biggest change to both this Bill and the Government Bill. It lies in the extension of time to complain about long-term financial services so it is essential that a solid and accurate definition is formulated. Section 5 of this Private Members' Bill, as passed by the Dáil, reflects a similar position in the Government's Bill which extends the time limits for complaints relating to certain long-term financial services to six years from the date of the conduct complained of, or three years from the date the complainant knew or ought reasonably to have known about the conduct. The new time limits for long-term financial services will apply to complaints made to the ombudsman about conduct that occurred during or after 2002. The service which the complaint is about must not have expired or otherwise been terminated more than six years before the date of the complaint.

The Private Members' Bill and the Minister's Bill make a distinction between long-term services and short-term services so that the resources of the ombudsman can be more effectively used to deal with these cases, where the consumer may not be aware of an issue until the long-term service has expired. This approach, as differentiating between long-term and short-term products, was taken as it was considered to be a balance between the concerns of the consumer representatives to give consumers greater protection and those concerns of the industry regarding record keeping and availability of documentation.

Furthermore, and perhaps more important, the extended time limits for long-term financial services required considering and balancing the rights of all parties in a case and ensuring the public interest was served, both in terms of the avoidance of late claims and the timely administration of justice. The existing time limit of six years has been retained for short-term services, where a claim should or could have been made within the six-year period. Six years should be sufficient time in which to make a complaint on issues as the service will most likely be concluded within the timeframe.

The wording of the definition of "long-term financial service" in amendment No. 1 addresses previous concerns related to previous technical drafts and definitions. As Senators may be aware, the Minister for Finance and the then Minister of State, Deputy Eoghan Murphy, were of the view that the definition of long-term financial services, as set out in the Deputy's Bill as passed by the Dáil, was not satisfactory because it included a wide range of policies or services that are subject to annual renewal or policies or services that could be cancelled unilaterally.

The Government's rationale for excluding annual policies from the definition of long-term financial services and its concern to avoid passing extra costs to consumers were well set out during the various Stages of these Bills. In essence, insurance companies would have to be mindful of the possibility of claims being taken in a longer timeframe for those products and they would accordingly pass the extra costs on to consumers. They could refuse to cover customers after a five-year period or increase annual premiums substantially after a five-year period, to deter them from becoming long-term customers under the current definition in the Private Member’s Bill. This would have a negative impact on customers.

The revised wording clarifies, for the avoidance of doubt, that a range of policies or services which are short-term financial services, such car insurance, travel insurance, etc., are not included in the definition of "long-term". Therefore, I am pleased that this amendment No. 1, as put down by the Senators on section 2 of the Bill, is identical to my amendment No. 1 and it can be agreed to.

Amendment agreed to.
Section 2, as amended, agreed to.
Section 3 agreed to.
SECTION 4

Amendments Nos. 2, 6, 9, 11, 14 and 15 are related and may be discussed together.

Government amendment No. 2:
In page 3, line 25, to delete “of Part VIIB”.

All of the amendments in this group are minor drafting technical amendments. The amendments aim to remove superfluous wording in sections 4, 5, 7 and 8 on the advice of the Parliamentary Counsel. The Sinn Fein Senators' amendment No. 15, on section 8 of the Bill, concerns the time period for appeal to the High Court against a decision of the ombudsman. I thank the Senators for changing the text from "within 35 days" to "not later than 35 days" which is clearer and aligned with the wording in the Government Bill.

These amendments are all highly technical in nature and I thank the Minister of State for bringing them forward.

Amendments Nos. 2, 6, 9, 11 and 14 are all Government amendments, while amendment No. 15 is in the name of Sinn Féin Senators. I assume that Senator Conway-Walsh and the Government are happy with amendment No. 15.

Yes, I am happy with amendment No. 15.

Amendment agreed to.

Amendments Nos. 3 to 5, inclusive, 8, 10, 12 and 16 are related and may be discussed together.

I move amendment No. 3:

In page 4, line 1, to delete “upheld or substantially upheld” and substitute “upheld, substantially upheld or partially upheld”.

These are a series of amendments I am proposing. The effect of the amendments as a group is to replace the finding of "substantially rejected" with the new finding of "partially upheld". This new finding is more accurate and, crucially, it adds a third positive rather than a second negative finding. This has a knock-on effect as regards the name-and-shame provision with the three positive findings now eligible as strikes under the three-strike system that applies there. The result will be greater transparency for the consumer.

Deputy Doherty’s Bill was innovative in introducing the fourth finding to allow greater transparency. I am happy the Government has accepted the logic of that position and may support this additional change.

With the agreement of the Seanad, I will discuss amendment No. 3, together with amendments Nos, 4, 5, 8, 10, 12 and 16. All the amendments in this group concern the categories of decisions that the ombudsman may make regarding a complaint received. These amendments aim to update the existing legislation with new categories of decisions that the ombudsman can make. The intention behind this change is to address FLAC’s recommendation to bring more transparency and clarity to consumers about the labelling of decisions the ombudsman makes after completing an investigation into a consumer complaint.

I accept all of the amendments to section 7 of the Bill that the Sinn Féin Senators propose. In the existing legislation set out in the Central Bank Act 1942, as amended, and the published Government Bill, section 60, on completing an investigation the ombudsman must make a decision in writing that the complaint is substantiated, not substantiated or partly substantiated. The categories of decisions set out in the Private Members' Bill as passed by the Dáil are currently as follows: upheld; substantially upheld; substantially rejected; and rejected.

Sinn Féin has now put down this group of amendments to revise the name of the category "substantially rejected"’ to "partially upheld". I think that this is an improved label and closer to the original category of "partially substantiated" and therefore we have no difficulty accepting the Sinn Féin Senators’ amendments.

This means that the following will be the categories of findings made by the ombudsman going forward: upheld, substantially upheld, partially upheld or rejected.

A change in the categories of decisions, from three to four, allows for increased transparency and better reporting regarding the ombudsman's investigation of complaints. This is a reasonable update and modernisation of the current rules which will bring more clarity to consumers. I intend to make Report Stage amendments to the Minister’s Bill, to also include these new revised categories in the Government’s Bill on Report Stage in the Dáil. As far as I am aware Deputy Doherty’s three amendments to section 4 and one amendment to section 9 are drafting changes to update the text in line with the new categories of decisions that the ombudsman can make, as set out in the amendment to section 7 of the Bill. As I agree to the amendment to the categories of decisions in section 7, I agree to these consequential amendments to the other sections 4 and 9.

Amendment agreed to.

I move amendment No. 4:

In page 4, lines 7 and 8, to delete “upheld or substantially upheld” and substitute “upheld, substantially upheld or partially upheld”.

Amendment agreed to.

I move amendment No. 5:

In page 4, lines 19 and 20, to delete “upheld or substantially upheld” and substitute “upheld, substantially upheld or partially upheld”.

Section 5, as amended, agreed to.

Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5
Government amendment No. 6:
In page 5, line 13, to delete “of PART VIIB”.
Amendment agreed to.
SECTION 6

I move amendment No. 7:

In page 5, to delete lines 28 to 30 and substitute the following:

“ “57CA.(1)On receiving a complaint, the Financial Services Ombudsman shall, as far as possible, try to resolve the complaint by mediation.”.

This amendment seeks to improve the mediation process by placing a greater emphasis on mediation. It is a question of "may" versus "should". My proposal is to resubmit the original wording of the current legislation as I feel that it places greater emphasis on mediation than the Bill before us currently does.

We hear about the Financial Services Ombudsman, FSO, quite regularly. I feel that much of the information that goes to the ombudsman is incomplete. Putting a more formal structure in place regarding mediation would be helpful. It would put the onus back onto the provider of the financial product to engage in a meaningful manner. Some cases cannot be resolved by mediation, but it may give rise to a situation where the resources of the FSO can be focussed on more difficult cases. It is something that could yield benefit, but it is very much put in to ensure that, under legislation, the service provider, the provider of the financial product, must engage meaningfully in mediation. There has to be an onus on financial service providers to put an emphasis on mediation if it is being investigated by the ombudsman. I welcome this amendment.

I welcome the amendment. These things are difficult and involve legal costs and so on. Advisors might be involved, and it becomes very expensive. Where possible, mediation should at least be tried. It might fail and matters might have to progress to the next stage. People are being put under pressure, having gone to the FSO. If there is a situation in which mediation can be used we should use it. It should at least be tried in every situation. Sometimes it will not work, but more often it does work. That is to everybody's benefit, not just in terms of cost but also in terms of people's mental health.

I understand that there was good discussion about the merits of mediation on the various Stages of this Bill and the Government’s Bill. Certainly we had a good conversation on Committee Stage of the Government's Bill last week.

Mediation is a facilitative voluntary process in which the parties to a dispute, with the assistance of a mediator, attempt to reach a mutually acceptable agreement to resolve the dispute. Under current legislation, the ombudsman may attempt to resolve a complaint by referring both parties to mediation. Indeed, mediation, by telephone and email and through meetings, is now the first and preferred option for resolving complaints. By engaging with the parties directly, and quickly, it is possible to achieve a timely and satisfactory resolution most of the time. In our view, mediation is a voluntary process and must be entered into freely by both parties in order to have a chance of success.

The current wording in section 6 of this Bill sets out the same wording that is in section 58 of the Government’s Bill. Sinn Féin's amendment seeks to reinstate the original wording on mediation that is currently set out in the Central Bank Act 1942. In effect, the proposed change to this Bill is that the ombudsman "shall, as far as possible", try to resolve the complaint by mediation, rather than "may, where he or she deems it appropriate, try to resolve a complaint by mediation".

The intention to support mediation as a key method to resolve complaints has been a core element of this Bill, and indeed of the Minister’s Bill. There is cross-party support for mediation in both Bills and the current trends which point to up to 60% of cases being resolved by mediation are very encouraging. The wording in section 58(1) was an attempt to improve on the drafting in the existing legislation. It was not meant to represent a change in policy or substance. If the Senators would prefer to retain the existing wording in this Bill as set out in amendment No. 7, I have no objection. However, for my Bill I would have to ensure that the wording would fit harmoniously with other sections, such as section 12 which also allows resolution of complaints by informal means. I would have to examine this in the context of Report Stage of the Government’s Bill.

I am supportive of attempts to support mediation in the ombudsman’s office and I think there is cross-party support on this policy. For this reason I can accept amendment No. 7.

Sinn Féin will make its own decisions, but is there merit in withdrawing the amendment pending the discussions taking place with the Minister on the amendment on Report Stage?

Certainly. In keeping with the spirit in which this Bill is being brought forward we will have further discussions with the Minister. We are in a position to withdraw it at this stage but we reserve the right to bring it back in on Report Stage, which we hope will be next week.

Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7

I move amendment No. 8:

In page 6, to delete line 17 and substitute the following:

“(c) is partially upheld, or”.

Amendment agreed to.
Government amendment No. 9:
In page 6, lines 19 to 21, to delete all words from and including “Amendment” in line 19 down to and including “follows” in line 21 and substitute the following:
“Section 57CI of the Principal Act (as inserted by section 16 of the Act of 2004) is further amended by substituting the following for subsection (2)”.
Amendment agreed to.

I move amendment No. 10:

In page 6, line 23, to delete “substantially rejected” and substitute “partially upheld”.

Amendment agreed to.
Government amendment No. 11:
In page 7, lines 1 to 3, to delete all words from and including “Amendment” in line 1 down to and including “follows” in line 3 and substitute the following:
“Section 57CI of the Principal Act (as inserted by section 16 of the Act of 2004) is further amended by substituting the following for subsection (4)”.
Amendment agreed to.

I move amendment No. 12

In page 7, line 5, to delete “substantially rejected” and substitute “partially upheld”.

Section 7, as amended, agreed to.

Amendment agreed to.
NEW SECTION

I move amendment No. 13:

In page 7, between lines 14 and 15, to insert the following:

Section 57CI of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by the insertion of the following after subsection (5):

“(5A) The Financial Services Ombudsman Council shall review on an annual basis the maximum compensation ceiling prescribed by the Regulations of the Financial Services Ombudsman Council, with

particular regard to the number and scale of upheld or substantially upheld complaints where the loss incurred on the complainant exceeds the maximum compensation ceiling under the current Regulation.”.”.

I understand that this was discussed on Committee Stage. The amendment and the new section arises to address a concern of the Free Legal Advice Centres that had flagged the issue before, and refers to the fact that there is a maximum compensation ceiling. I understand that there is a difference between rectification, which does not have a ceiling, and compensation, which does. Equally this amendment does not ask for an increase in the ceiling, but rather that the Financial Services Ombudsman council should, "review on an annual basis the maximum compensation ceiling prescribed by the regulations, with particular regard to the number and scale of upheld or substantially upheld complaints where the loss incurred on the complainant exceeds the maximum compensation ceiling".

While €250,000 looks like and certainly is a lot of money, it is not unreasonable over time that the FSO council should review the ceiling. It does not have to be a detailed process and could simply be a matter of reviewing the appropriateness of the ceiling. I ask the Minister of State to consider it. I accept what he said on Committee Stage at the select committee, but it is worthy of tabling for discussion today. I appreciate the difference between rectification and compensation but all we are asking for is that there would be a review on an annual basis of the maximum compensation ceiling. Perhaps the Minister of State and the Department could take that on board.

I have no issue with the amendment as such. I thank Fianna Fáil colleagues for bringing it forward, but I am not aware of any demand for a change in the ceilings. Certainly, I see no reason why the council would not keep the figures under review. What data there is goes back to the 2014 FLAC report which suggests the ceiling is a very hypothetical one and that any review at this point would not result in a change. However, we have seen the likes of the tracker mortgage cases in which family homes have been lost. As such, we cannot rule out the need for a review at this stage. It is important to discuss it.

Is some of this work not already done? Has it not already been looked at by the Financial Services Ombudsman's council?

All I am doing today is addressing the Sinn Féin Bill originated by Deputy Doherty. That is why I am bringing the amendment forward. It was not included in the original Bill. We are dealing with the Bill, not anything else, today. The Government Bill may address it. We can have a look at that in the fullness of time. I am simply trying to improve the already substantially worthwhile legislation which has been put forward to see if we can make it even better than it was. I am not asking for the ceiling to be changed, I am just asking for it to be kept under annual review.

As far as I am aware, the intention of the amendment is to oblige the council to review the compensation ceiling by which the ombudsman must abide and, in particular, report on instances where a complainant experienced a greater loss than the maximum compensation payable. The proposed amendment might be based on a misunderstanding. The existing legislation provides for a number of redress tools, including rectification and compensation. Rectification makes good the loss to the consumer and there is no ceiling in respect of it. Compensation, which can be additional to rectification, can be high or low depending on the specific facts of the case. As far as I understand it from the ombudsman, the ceiling of €250,000 has not caused problems in direct compensation. Compensation, which can be additional to the rectification, can depend on the impact on the individual, for example, the inconvenience caused to the consumer by the misconduct of the provider. This is usually determined by the specific facts of the case.

Rectification in excess of €250,000 has been given out in certain cases where the ombudsman has made good a complaint by putting a person back in the position in which he or she previously was before the complaint arose. Furthermore, there is provision in the Government Bill in relation to the compensation ceiling. For example, the Minister for Finance may make regulations under section 4 of the Bill on his or her own initiative or at the request of the Ombudsman. Section 4(h) of the Bill which deals with complaints and redress regarding financial service providers states that such regulation may, "specify a maximum amount of compensation that the Ombudsman may award to a complainant under section 60".

There are also other provisions in the Government Bill that may interest Senator Horkan, in particular, provisions on the carrying out of reviews. Section 25(3) of my Bill on the publication of other reports provides that the ombudsman may, from time to time, prepare and submit to the Minister such other reports in relation to the performance of the functions under the Act as he or she considers appropriate. Section 25(4) also enables the ombudsman to publish reports on other matters if he or she considers that it would be in the public interest to do so. For these reasons I must re-state the Government’s position that we cannot accept this amendment.

With the greatest of respect, the answer provided by the former Minister for Finance, Deputy Michael Noonan, on 11 May and the one provided just now was probably cut and pasted word for word. That is fine because it was probably a very relevant answer. However, it suggested there was a misunderstanding on rectification versus compensation which I alluded to at the start of my discussion having gone through the amendment and the response to it. I pointed that out. I understand that the Minister of State has a pre-prepared answer but I had already addressed that point.

It is worth putting the amendment forward. I simply want the Minister of State and his officials to take it on board and I would like Sinn Féin to understand why I brought it forward. I understand completely the difference between rectification and compensation. Perhaps others at an earlier stage did not but I certainly do. I retable the amendment because it is still worthy of consideration. I am not sure if the reservations of the Minister of State are warranted. Possibly, they are not. It would be of value to make the amendment to the Bill but I will not press it at this point by calling us all in here to vote for the next 20 minutes. I ask the Minister of State to consider what the amendment seeks to do on the basis of what I said today and to consider it in the context of both the Government's Bill and the next Stage of this one.

I will take on board what Senator Horkan said. We will review the amendment and consider the matter again. I cannot say we will take it. Some of it is covered already. However, we will review the matter. Everybody is being very facilitative of this legislation.

Amendment, by leave, withdrawn.
SECTION 8
Government amendment No. 14:
In page 7, lines 16 and 17, to delete “Subsection (3) of section 57CL of PART VIIB of the Principal Act (as inserted by section 16 of the Act of 2004) is amended to be read as follows” and substitute the following:
“Section 57CL of the Principal Act (as inserted by section 16 of the Act of 2004) is amended by substituting the following for subsection (3)”.
Amendment agreed to.
Government amendment No. 15:
In page 7, line 19, to delete “within” and substitute “not later than”.
Amendment agreed to.
Question proposed: "That section 8, as amended, stand part of the Bill."

I wish to flag to the House that I may return to section 8 on Report Stage to address a technical drafting error. As drafted, section 8 refers to a decision of the Financial Services Ombudsman whereas the correct term is "finding". This is the term used throughout the Central Bank Act 1942, the principal Act.

Following the technical amendment, the section now allows a consumer to make an appeal not later than 35 days from the decision or finding. I note there may be an issue, which I take on board, with the word "decision". Perhaps "finding" may be the more appropriate term here. I will examine the issue for possible amendment on Report Stage also. I wish that to be noted.

Question put and agreed to.
SECTION 9

I move amendment No. 16:

In page 7, line 30, to delete “upheld or substantially upheld” and substitute “upheld, substantially upheld or partially upheld”.

Amendment agreed to.
Section 9, as amended, agreed to.
SECTION 10

I move amendment No. 17:

In page 7, between lines 30 and 31, to insert the following:

“Requirement to hold oral hearings

10. Where a complainant has made a request to hold an oral hearing, and where there is a discrepancy in the account of events between the parties that is fundamental to arriving at a conclusion, the Financial Service Ombudsman shall be obliged to hold an oral hearing.”.

This amendment was tabled on Committee Stage. It is a requirement to hold oral hearings. Specifically, it provides that where a complainant has made a request to hold an oral hearing and there is a discrepancy in the account of events between the parties that is fundamental to arriving at a conclusion, the Financial Services Ombudsman shall be obliged to hold such an oral hearing. This comes out of the 2014 FLAC report to address the imbalance. It does not make it mandatory. Rather, it seeks to provide that there shall be a hearing when a complainant has made the request and there is a discrepancy. There will be many situations where that does not arise. I appreciate there may be resource implications for the Financial Services Ombudsman but it removes some of the discretion it currently has which would be helpful to those looking for an oral hearing where there is a discrepancy. They will get an oral hearing in circumstances where, at the moment, the power is all in the ombudsman's hands rather than those of the consumer.

I note Senator Horkan’s amendment, which seeks to introduce a new section to Deputy Pearse Doherty’s Bill to oblige the Financial Services Ombudsman to hold an oral hearing where there is a discrepancy in the account of events between the parties and the complainant has requested such a hearing. As the Senators may be aware, as part of the ombudsman's procedures for resolving complaints, an oral hearing may be necessary where there is an issue of fact in dispute between the complainant and the provider in circumstances where the ombudsman cannot resolve fairly without hearing both sides.

In the course of reviewing the evidence, the ombudsman will consider whether an oral hearing is necessary. It is solely at the ombudsman's discretion to decide whether to hold an oral hearing. This proposal to require oral hearings where there is a discrepancy in the parties' account of events was discussed during the Dáil Committee Stage debate on 11 May. The then Minister for Finance, Deputy Noonan, noted during the debate that oral hearings are best left to the discretion of the Financial Services Ombudsman and that this is common practice in many public bodies.

While I appreciate what Senator Horkan is trying to achieve, the proposal could have a negative impact on the consumer as there are always discrepancies at an initial stage when a complaint is made. I am advised that the proposal could inadvertently impose a requirement for oral hearings in all circumstances. I have been informed that it is the experience of the Financial Services Ombudsman that providers are usually well represented at oral hearings and, therefore, it can be a difficult process for the complainant who must undergo cross-examination in an adversarial environment. As a result, the courts have, on a number of occasions, endorsed the ombudsman's decision regarding whether to hold an oral hearing. In addition, the High Court and Supreme Court have noted on a number of occasions that the ombudsman holds oral hearings where necessary and it is more suitable that this power is maintained in a discretionary manner.

It seems contrary to fair procedures to allow only the complainant to dictate when an oral hearing is held. There is a risk that the proposed amendment would also have to allow the provider to demand an oral hearing. If this were the case, it is the view of the Financial Services Ombudsman that complainants would be placed at a significant disadvantage and potentially discouraged from taking cases in the first place. Moreover, the premise of the Bill and existing legislation is to support informal redress procedures. I am sure the Senator will agree that the best way to achieve this is through mediation. The Government Bill allows for the Financial Services Ombudsman to take a more proactive approach to encourage participation. Mediation is also at the heart of this Bill.

While I appreciate the Senator’s desire to achieve a solution in difficult cases, it is clear that oral hearings must be at the discretion of the Financial Services Ombudsman and that mediation should be the primary route. For these reasons, I do not support this amendment.

I understand the import of Senator Horkan's argument. The purpose of the mechanism provided for dispute resolution by the Financial Services Ombudsman is to offer a low-cost service to ordinary consumers who wish to have a matter resolved as quickly as possible. Oral hearings invariably take a long time and can be costly. In routine cases, the ombudsman has the skill sets to examine the discrepancies and make an open and fair decision. Mediation is the key. In many cases, the dealings of financial institutions with the Financial Services Ombudsman are almost pro forma. The institutions are happy to have matters kicked on to the Financial Services Ombudsman. The onus should be placed on them as part of due diligence to seek to resolve matters by way of mediation. While the amendment is well intended, it could have unintended consequences that would work against consumers.

I reiterate that there is no doubt that mediation is the best option. The amendment provides for an oral hearing only where a complainant makes a request. It does not force people into oral hearings they do not seek. While I agree that one should be careful what one wishes for in the sense that people should not take the oral hearing route if they do not know what is involved. The amendment is specific, however, and refers only to circumstances in which a complainant makes a request to hold an oral hearing. It does not force people who do not want an oral hearing to have one and it does not provide that the financial institutions can make the same request. If someone wishes to table an amendment to that effect, the House can consider it but that is not what the amendment is about.

The amendment refers to circumstances in which a complainant wants an oral hearing for whatever reason. He or she may want to feel his or her case is being given a hearing. People may have lost significant sums of money or their homes, for example, through changes in tracker mortgages. They may want a day to make their point as vociferously as they can. If the Financial Services Ombudsman decides against such a request, a hearing will not be held.

The amendment provides that an oral hearing must be held where the complainant makes such a request and a discrepancy arises. One could argue that there will always be a discrepancy but that it is not necessarily the case. People may agree the facts, even where they do not like the facts. The amendment only covers circumstances in which there is a discrepancy between the accounts of events between the parties. I presume the Financial Services Authority would be the arbiter of whether there is a discrepancy.

No one is being forced into an oral hearing and anyone who believes that is my intention should read the amendment carefully. It states specifically that where "a complainant has made a request to hold an oral hearing, and where there is a discrepancy in the account of events between the parties that is fundamental to arriving at a conclusion, the Financial Service Ombudsman shall be obliged to hold an oral hearing". The amendment arose from the Free Legal Advice Centres report, Redressing the Imbalance. It does not make an oral hearing mandatory but gives a little less discretion to the Financial Services Ombudsman and a little more power to the consumer. I reiterate that mediation is a better option but that may not always be possible, nor will it always be the solution.

We are doing our best to improve matters for consumers. If the amendment is accepted and the legislation changed, financial services providers could also be entitled to call an oral hearing. If both parties are entitled to call an oral hearing, it could lead to a major increase in the number of oral hearings. The number of cases in which the voluntary mediation process has been used has increased from 1% to 60%. The system has improved significantly and is working reasonably well. I am concerned that the amendment could have unintended consequences.

The Financial Services Ombudsman believes the proposed change would be an error. We are all doing our best to implement good legislation to further protect consumers but I cannot support the amendment because it could have an unintended consequence that would seriously impact on the Bill.

The Bill was introduced in good faith by Deputy Pearse Doherty in the Dáil and Senator Conway-Walsh and her team in this House. We are all working to achieve the best outcome for consumers. I speak on behalf of consumers and the people who put us here, as opposed to the Financial Services Ombudsman. If the ombudsman does not want a change in legislation, it is not a reason for me not to propose such a change. The Minister alluded to the fact that the Financial Services Ombudsman does not believe the amendment is a great idea but the ombudsman would believe that, would he not?

I acknowledge the Minister of State's bona fides and thank him for his comprehensive response. I do not agree, however, that the amendment could have unintended consequences as it refers to complainants and I do not believe many financial institutions will make complaints against their customers. While I will not press this worthy amendment today, I may invoke my right to reintroduce it on Report Stage because it could benefit some people.

In terms of legal fair play, I suppose the issue is that if the complainant can seek an oral hearing, I suspect the Financial Services Ombudsman can do likewise. When an oral hearing is requested, I am not certain of the legal obligation on the Financial Services Ombudsman to give a reason as to why such a request is not acceded to. Perhaps that is something that could be examined in the context of ensuring that the Financial Services Ombudsman complies or explains. Obviously, there have been cases where people would have liked oral hearings to be held, where they requested such hearings but where their requests were not granted. We might not have looked at the small print. Perhaps the Minister could consider the matter. In addition, perhaps what I have suggested might be a way in which to address the concerns raised by Senator Horkan.

It would be preferable and would improve the legislation if it was included. I will not press the amendment. I welcome the legislation in so far as it goes. I thank Deputy Pearse Doherty, Senator Conway-Walsh and their colleagues for putting it forward and my party colleagues, Deputies Michael McGrath and McGuinness, who are members of the select committee and who also contributed to the debate. I think it is worthwhile legislation. I am sure the Government Bill - when it finally emerges - will be equally worthwhile. I thank Sinn Féin and all other Senators for their contributions to the debate. I will not press the amendment at this point.

Amendment, by leave, withdrawn.
Section 10 agreed to.
TITLE
Question proposed: "That the Title be the Title to the Bill."

Just before we conclude, I take this opportunity to welcome Deputy Pearse Doherty who is in the Visitors Gallery. I thank him for all the work he has done on this legislation. I thank Senator Horkan and his party for their input and for tabling the amendments today, but also for withdrawing them in the interests of the consumer.

It was in the interests of getting the legislation passed rather than in the interests of the consumer. It will benefit the consumer.

I thank the Minister of State, Deputy D'Arcy, and his predecessor for their contributions.

I think it is important to acknowledge that there has been very positive input into the Bill under the leadership of Deputy Pearse Doherty. I thank him for that. I look forward to taking the Bill to Report Stage next week. I am aware that, if the Department is agreeable, the Leader will facilitate us in that regard.

I welcome Deputy Pearse Doherty who is a former Member of this House.

Senator Conway-Walsh said I withdrew the amendments in the interests of the consumer. I did not withdraw them in the interests of the consumer but there is an indirect benefit if the legislation is passed more quickly. I think the amendments would have made the Bill better, but in the context of its passage through the House and arriving at a consensus, I am happy to allow it to go to the next stage. I am sure Senator Conway-Walsh did not mean what she said.

No. That is exactly what I meant.

I thank everybody involved, including Deputy Pearse Doherty and the various Senators. The legislation is working its way through the Houses of the Oireachtas in tandem with a Government Bill and as we all get another bite at it, we improve it on each occasion. There are occasions when we do not agree but, in the spirit of compromise, we want to get the best legislation possible. I thank everybody, including Deputy Pearse Doherty, who, like me, is a former Senator. I hope we can get everything over the line before the recess.

I thank the Minister of State and all the Senators who contributed.

Question put and agreed to.
Bill reported with amendments.

When is it proposed to take Report Stage?

Report Stage ordered for Tuesday, 11 July 2017.