Do members have comments on the report on the wards of court?
Wards of Court: Committee Report
Most of us have received correspondence from Ms Mary Farrell, who raises very serious issues given her practical experience. She has made a formal request to meet the committee. Did we accede to this request or did we rule it out? It is not often people who are directly involved want to engage on a draft report of the Committee of Public Accounts. It would be good for the committee to respond to a member of the public who wants to contribute to a draft report. We met people from officialdom in person but to my knowledge we have not met the citizen in person. It is not very often that I ask for someone to be brought before the committee. We are producing a draft report and those involved have very good points to make.
I know some of the cases are quite historic, but we could hear about current experience and tie down specific recommendations. If funds are running low wards of court can apply for a disability allowance payment but any money left in the fund will be used against them in means tests, whereas there is a special exemption for those with a fund set aside from compensation with regard to State institutions and hepatitis C. Not only is the money from such awards from the State ring fenced and not used against the recipients as means in social welfare tests, but the income earned from the payments, such as if someone buys a property or invests the money in bonds or shares, is exempt from income tax depending on the proportion of total income coming from the investment. The State has gone out of its way with regard to social welfare payments and taxation to help recipients of several equivalent funds.
We have mentioned the possible need for legislation. Let us be truthful; years ago life expectancy was not as long as it is now and this is an issue. I hate to say it, but the actuarial basis years ago was that people were probably not expected to live as long as they do now. Thankfully they are living longer and if the cases were reassessed today under the same procedures the person would probably have a longer life expectancy and a greater sum would attach.
Whatever balance is in the account, people should at least have the option of setting aside the balance or having it taken into consideration by the State with regard to guaranteeing an annual payment from here on in. Legislation is moving in this direction. Compensation cases are going through the courts at present with regard to children who were damaged at birth and mechanisms are in place whereby instead of giving a family €4 million, €8 million or €6 million, as the case may be, the court is told no one knows in this day and age whether the person will live to be 20 or 90. A long-term permanent arrangement must be put in place and not a fixed sum. This is under the current legislation but we need to consider the people still in the system. It is no good saying it will apply for new people but tough for those already in the system. The Vice Chairman is getting the gist of what I am saying. We have had other draft reports and its not often people asked to engage with us on them. I am not prescriptive on whether it would be a meeting of the full committee or a delegation of the committee. I would not be happy with the report going through as I have so many questions on it. The report is good but we need to go a bit further.
My information is that much of what Ms Farrell has asked us to incorporate is in the draft report. Why do we not just go back to Ms Farrell, through the clerk to the committee, and go through what has been submitted by her and explain to her what is incorporated in the report. If she still wants to come in and engage at that point the committee will do so.
I am not arguing with the Vice Chairman. In fairness to Ms Farrell there is almost more in her observations than we have in our draft report. She has a ten page document. Some of it queries and involves content which is historical at this stage, but if she were asked to give us the points she wants incorporated we could see whether we can do so. She states there is a new guide to the investment policy with four categories depending on whether it is put in cash, bonds or equities. The documentation from the Courts Service states the emphasis of category four, the category about which Ms Farrell is complaining, is on achieving a stronger level of capital growth. Capital growth could be negative if one is taking a higher risk. These people should not be in a risk situation with regard to gaining or losing on the stock exchange.
Does the Deputy want to proceed in the way we have explained?
What precisely did the clerk say to her?
Clerk to the Committee
The correspondence from Ms Farrell reflected an earlier draft which has been substantially changed. I will certainly go back to her and go through the points she has raised and explain what is in the report. She may not have seen the revised draft at this stage.
The most recent draft.
Clerk to the Committee
Yes. If there is an outstanding issue I will come back to the committee and if committee members want to meet her there is no problem.
Will we do the written piece first?
Clerk to the Committee
Yes.
It will probably hold up the process for a couple of weeks.
Clerk to the Committee
That is no problem.
Is there anything in what she has said that the clerk thinks is unreasonable? I do not think there is.
Clerk to the Committee
The particular concern of the committee was about the people whose funds would run out.
Yes.
Clerk to the Committee
I dealt with this whereby special legislation would be used if necessary so income from the fund would not be taken. The point Ms Farrell is making is if one has a small fund and goes for disability benefit one will be turned down.
Yes.
Clerk to the Committee
We are trying to put wards of court in the same category as groups such as the hepatitis C compensation fund.
The draft report hints at including legislative provisions. We might have to be more specific and say this exactly in the final draft.
Clerk to the Committee
That is fine.
I fully support what has been said. I met Ms Farrell and I firmly believe she should come before the committee and be allowed to speak if it is what she wants to do. As has been said, the committee has heard from the opposite side and it is very important that she be heard if she feels the need to be heard. One of her concerns is that while funds are held for wards of court in trust they are invested. Families have no say in this and do not even know what is coming down the line. Most of them have never received a statement and do not know what is in the funds. They are assured they are not being mismanaged but this is not good enough. Each family should be given a statement and this should be included. Ms Farrell should be brought in. These are not facts and figures to these families but a family member, son or daughter. They should be heard and I support this wholeheartedly.
Very good points have been made. We are speaking about almost €1 billion of funds and a very large number of people, at least 2,600 people in general terms. The point made by Deputy Fleming is that life expectancy is quite different now from what it was 20 or 30 years ago.
We are dealing with a large amount of funds. The lady has communicated over a long period of time. She does not just represent herself but also represents another number of families as well. From that point of view, it would be very useful for us to meet them before a final report is put together. Regardless of when the letter goes out asking her to have a look at the final draft report we have here, we should indicate our willingness in some sympathetic terms. We should not say that if there is nothing new in it, we do not need to meet her. It should be a sympathetic type of letter. I for one would certainly like to meet her, considering the amount of work she has done and the good proposals she has made.
Fair enough. Deputies Perry and Ross have indicated.
I may not have been here for the report. It was clear as I read through it that the wards of court system has a huge duty of care for many. Their residual accounts are being depleted. It is a very harrowing situation. They have to depend on their families and on the HSE to fit in. I have a question that the clerk might be able to answer. Was the Law Reform Commission brought in on this?
Clerk to the Committee
No, just the Courts Service.
Did the Law Reform Commission carry out any report on this?
Clerk to the Committee
I do not think so, but I can check it.
It recommends an annual payment, which the Law Reform Commission has been talking about, rather than the fixed sum.
I take the Chair's previous point that this is a very important document in light of the substantial fund and the number of people involved. The element to which I refer is the question of just having a report. I fundamentally believe that reports are one thing, but people want know how the recommendations in reports are going to be acted upon and how best that can be done.
I would like to expand on that point. One of the recommendations in the report is that the Comptroller and Auditor General should be allowed to audit this entire area. That would provide a completely different level of oversight for the families involved. That is something we have put in the report. It is there. It is probably doable. There is a legal block on the Comptroller and Auditor General engaging in that respect right now. As far as this committee and the Comptroller and Auditor General are concerned, that is a reasonable action which can probably be achieved out of the report.
When I was the Chairman of this committee, there was a duty of care provision whereby the Government was obliged to come back with a response within 60 days of a report being furnished to a Department. That was known as closing the cycle. There was a legal obligation on the Government to issue a formal response. Can that be done?
Clerk to the Committee
It gives a formal response. I do not know whether there is a legal obligation on it to do so. Sometimes it comes back a bit more quickly than on other occasions. It can certainly come back quite quickly in the case of a focused report like this one.
As the Chair has said, at the moment it is not the will of the Oireachtas to change legislation to allow the Comptroller and Auditor General to do an audit. Is that the fundamental cornerstone of what the Chair is saying?
That is probably the most progressive step this committee can achieve when it comes to oversight of this entire area.
Is there any merit not only in formally lodging this report but also in meeting the Minister directly on this with the key recommendation, as against lodging it in the documentation? If this document is as important as we have all said it is, should the Chairman and the Vice Chairman seek a formal meeting with the Minister to discuss it? We are dealing with the most vulnerable in society who are in institutionalised care and may possibly have no next of kin. This is a very important document. I formally suggest that rather than launching it with the Minister, we should seek a direct meeting with her in conjunction with this report to ascertain her plans, if any, to introduce legislation to appoint the Comptroller and Auditor General on this.
I think the concept of the Comptroller and Auditor General looking at this from now on is fairly advanced. The Deputy's suggestion is a good one. It is something the committee could do very easily.
I suggest we proceed in this manner. I am aware of many previous reports that regrettably have gone into dustbins. A huge amount of work is done to produce fantastic documents, but they are just shelved. It is a bit of a public relations stunt to launch a report one day in the newspaper and think we have our job done. In two years time, the same issue that the report dealt with will be back before the committee again and nothing will have been done.
Yes, okay. We will do that.
Like other members, I have met some of these people. I do not know whether they have got this report yet.
Clerk to the Committee
No.
Based on some of the things they have said to me, their justifiable complaints are met by many of the things in this report. If those things were implemented, these people would be satisfied to a certain extent. Two things have to be remembered. First, as Deputy Fleming has said, many of these awards were made at a time when life expectancy was much less. That is one of the reasons they have run out and the people have been left without funds. Obviously, that has to be remedied by the State providing more funds because people's legitimate expectation as a result of these awards has to be met.
The other reason, which I do not think has been mentioned today, is the absolutely dismal investment performance. That is very serious. They are not qualified. I have talked to them, and they are not qualified. I do not know whether they were qualified to examine that. I have seen some of the figures they have produced for me. Despite the fact that the markets have fallen, these investments have performed incredibly badly. We have to ask why that is. I do not think it is good enough for us to say blandly that the funds of the wards of court have gone down in line with the markets. I am not sure that is true. I have not had time to investigate it. It looks from what I have seen that a fund went down from €509,000 to €280,000, admittedly at a time when the markets were tumbling. We should ask why they invested in high-risk equities.
As Deputy McFadden was saying, it appears that the relatives have no say in where this money goes. It is being put into high-risk investments against their wishes - they may be retrospective wishes, to be fair to everyone else - and without consultation. That is certainly deeply regretted now. That is the principal reason these moneys are so low. Questions should be asked. It involves the committee in a certain amount of more work. Now that we are here, I think we are under some sort of an obligation to open this avenue. Why has all this money been lost on the markets? Why was it invested in equities rather than in gilts? Obviously, gilts and cash are much safer. It might have been wiser.
Looking at the accounts with which I have been furnished, I think we should ask the investment committee in to explain what it has been doing and why this has happened. I am not pointing the finger at that committee, but it demands an explanation. There are some strange things there. I am only seeing them now for the first time. For 2013, fees amounting to €1.83 million were charged as a result of transactions processed in the accountants' office. That is an extraordinarily high figure. It may be justified, but it does not say what it is for or why. This is coming out of the funds of the wards of court. Quite rightly, we have opened this question. We have to ask what is being done with the money. Are we getting value for money out of it? I think we should certainly have the relatives in. I also think we should have the investment committee in to ask it what it is doing with the money and what procedures it is going through.
That is a fair point for another reason. These investments are advertised as being placed in the most conservative products. That is the ethos behind them. For that reason as well, it needs to be questioned with regard to the success they have had in many respects. I take it from the members that Ms Farrell needs to be contacted by the clerk with regard to the most recent draft report to explain what has been incorporated into that report based on what she has sent to that committee. If necessary, we can then go back to Deputy Fleming and others and set up a private meeting or, if members wish, a public meeting. That would be fine. We will determine that after the meeting with the clerk. Deputy Ross has suggested that the finance committee should also be invited into the committee. Is that okay?
They call themselves the investment committee. It is the same thing.
Okay. If no one else wishes to contribute, I will bring the meeting to a conclusion.
The committee adjourned at 10.40 a.m. until 10 a.m. on Thursday, 7 May 2015.