Joint Committee on Public Service Oversight and Petitions díospóireacht -
Wednesday, 17 Sep 2014

Redressing the Imbalance Report: Free Legal Advice Centres

Chairman

Apologies have been received from Senators Harte, Ó Clochartaigh and O'Keeffe. I remind everyone present, including members of the committee, media personnel and those in the Visitors Gallery to ensure their mobile phones and BlackBerry devices are turned off completely, or switched to flight or safe mode, because they interfere with the sound system, even if they are in silent mode. We are pleased to welcome Ms Noeline Blackwell, who is the director general of the Free Legal Advice Centres, and Mr. Paul Joyce, who is a senior policy analyst with the organisation. They are here to make a presentation on a recent report, Redressing the Imbalance, which was published by the Free Legal Advice Centres. I thank them for forwarding their presentation to the joint committee. It has been circulated to the members of the committee. As many of them will be aware, FLAC is an independent human rights organisation that seeks to promote equal access to justice and eliminate discrimination in all its forms. Its work involves providing information and advice to the public and carrying out research and public advocacy.

The report, Redressing the Imbalance, is an in-depth study which analyses the legal protections offered by the State to people availing of credit from banks, hire purchase companies, credit unions and other finance suppliers. Many members of the committee are familiar with the Free Legal Advice Centres. They are eager to hear the presentation and engage with the representatives.

Before we commence, I must inform the 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 are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, 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. They are asked to respect the 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 a way as to make him, her or it identifiable. I invite Ms Blackwell and Mr. Joyce to make their presentation.

Ms Noeline Blackwell

I thank the Chairman and the members of the committee for inviting us to come here today. As the Chairman suggested, the Free Legal Advice Centres are known as an organisation that provides advice and information. Our work on debt has probably also been to the fore in recent times. Many questions relating to credit are associated with the work we do to protect those with consumer debt. The work we did over a long period of time on questions like how credit gets given in the first place, whether the protections given to consumers are adequate to protect their human rights and whether adequate redress systems are in place led to the publication of the substantial report we are discussing today. My colleague, Mr. Paul Joyce, who is FLAC's senior policy analyst, is the main author of the report in question. After he has made a presentation on the report, we will try to assist the members of the committee by clarifying matters of interest to them.

Mr. Paul Joyce

I thank the Chairman and the members. I will be brief. A five-page briefing note has been given to the committee. I think a discussion would be far more useful. Perhaps it would be much more interesting from the perspective of members. As Ms Blackwell has said, this report is about two things. It is about the kind of protection that exists for consumers of financial services at the point at which they draw down credit. It is also about the systems of complaint and redress that are available for people who are unhappy about the conduct of financial service providers.

The first part of the report looks at the origins of the EU consumer credit directives. It suggests that they did not really do us any favours during the boom time, in terms of curbing irresponsible lending practices. It looks at the poor transposition of those directives into Irish law. In the course of the interviews we conducted with representatives of the Central Bank, they admitted that the bank does not really police the consumer credit legislation. They prefer to police compliance with their own codes. That, of course, leads us to another problem, which is the legally binding nature - or otherwise - of Central Bank codes. It is of interest that these codes are neither primary nor secondary legislation and are not laid before the Houses of the Oireachtas. Therefore, the Members of the Oireachtas essentially have no say in how they are put together. As the committee will be aware, the code of conduct on mortgage arrears is of particular importance at the moment in the context of the alternative repayment arrangements that are supposed to be put in place to avoid home repossession.

I would like to summarise the first section of the report. We are saying we do not want another boom and bust fiasco. During the boom time, we were really missing proper regulation of credit checking and of assessment of capacity to service agreements. Interest rates were not regulated properly. We needed to have more control over sub-prime lenders. We accept that credit institutions are self-policing at the moment, but that might not always be the case. If we are to avoid a recurrence of the same situation, we need really strong rules about responsible lending and borrowing and proper information across the board for all forms of credit. We note in our submission that the hire purchase area is growing at the moment. A person is entitled to enter into a hire purchase agreement. Hire purchase companies are not regulated by the Central Bank. The consumer protection code does not apply to hire purchase. There is no obligation on a hire purchase lender to assess capacity to afford the agreement in the first place.

We looked at the operations and procedures of the Financial Services Ombudsman's bureau. We also looked at the legislation that underpins that office, which was established on a statutory basis. In the course of doing this, we interviewed a number of users of the services of the FSO - people who had made complaints, etc. We had supported some of them, through advice or otherwise. We also interviewed a number of money advisers with the Money Advice and Budgeting Service who had assisted clients with their complaints to the FSO. Given that this report runs to over 200 pages, it is very hard to summarise it to any great extent, but I would like to mention some issues that came out of the analysis of the FSO. One of the messages that came clearly across was that there is a strong inequality of arms between the consumer complainant and the responding regulated financial service provider. Those who responded to our interviews stated that this was not helped by the formality of the procedures, such as the exchange of submissions. Many people felt that they were weighed down by a welter of technical detail when all they really wanted to do was articulate their complaints and try to obtain some form of redress.

There are many statistics in the report. It is clear that many complaints disappear off the horizon with no explanation. Many settlements take place before an investigation takes place. It is clear that the Financial Services Ombudsman does not really know the reason for this and has not inquired into it to any great extent. The success rate is quite low. Just 10% of the complaints that proceed to a full investigation are fully upheld. Another 17% are partially upheld. In 2012, three out of every four complaints made that went to a full investigation ended in failure. It seems that the amount of money awarded as compensation in cases of success is on the decline. We are not against the notion of an FSO - on the contrary, it is a good idea to have a free alternative dispute resolution service - but we are seriously calling into question how well that service is performing its functions.

The report finds that there are problems with the legislation that established the Financial Services Ombudsman. We think it should be reviewed and the six-year rule should be reformed. The level of mediated cases is low. The impression we got strongly from the FSO was that the institutions are basically using that bureau as an accelerated complaints mechanism from their own complaints procedures. The aspect of this matter that probably concerns us most of all is that the avenue of appeal for a complainant who is unhappy with the outcome of his or her complaint is to the High Court. We believe this is fundamentally inaccessible and unfair. It exposes the complainant to the serious risk of legal costs. It is clear from decisions of the High Court that the appeal is not a full appeal - it is actually a review to see whether the FSO committed any serious error in coming to its decision. Many people do not understand that it is not a rehearing of all the basic facts. We are saying that the Circuit Court would be much more appropriate. We are also saying that the FSO should not necessarily be the respondent to all the appeals that take place. It appears from the 2012 figures that the vast majority of appeals to the High Court are from consumers, surprisingly. We believe the FSO could spend more time on developing the expertise of its office, rather than spending so much time defending appeals in the High Court. That is a short summary of a lengthy piece of work.

Chairman

I thank Mr. Joyce for the outstanding work he has put into this report. I invite the members of the committee to ask some questions.

Deputy Richard Boyd Barrett

I thank the witnesses for the introduction and for the work they have done on this document. I enthusiastically support the thrust of what FLAC is trying to do. I would like to ask about how we might rectify the problems that exist. I have recently come across quite a few cases, involving the Financial Services Ombudsman and other bodies, in which the "inequality of arms" alluded to by Mr. Joyce has been a feature. I refer to cases in which people are in dispute with organisations that have substantial legal resources.

I have had cases where people are dealing with educational institutions and other big institutions that have lots of resources to stymie one's effort to make a complaint or to challenge certain decisions. How can we rectify that imbalance so that the playing field is a bit more level for the ordinary citizen in pursuing a complaint or challenging a decision? I am curious to hear a response in that regard as the situation appears to be very difficult.

Many cases are intractable because the people involved feel they have been wronged. When I look at the cases in question, on the face of it that appears to be the case, but people just cannot get a proper hearing because those whom they are up against have the resources to make life difficult at every twist and turn given the high-powered legal resources at their disposal. It is impossible for people to take a case and they end up literally pulling their hair out.

Is Mr. Joyce saying that if people do not get the result they want from the Financial Services Ombudsman that there are other places of recourse such as the Circuit Court? Is he saying that people could make an application to the Circuit Court and have a judge hear the full facts of the case, which would be easier than going to the High Court? Is that an easier option to take? Will it be doable for people? When I come across such cases I do not even know where to begin to advise people what to do next.

Mr. Paul Joyce

It is clear that financial services is a tricky area as the provider has a lot more knowledge and expertise than the consumer. The attitude the Financial Services Ombudsman tends to adopt is that the office has to be an honest broker and cannot favour either side, even though often the complainant sees the ombudsman as a consumer champion, which the office clearly is not. There is nowhere specific that one can go.

Deputy Richard Boyd Barrett

Why does Mr. Joyce say the Financial Services Ombudsman clearly is not a consumer champion?

Mr. Paul Joyce

That is the strong view of the office. It is a creation of statute and cannot take sides. It is an independent office. There is no specific service consumer complainants can access to prepare their complaints. In some cases money advisers from MABS can help. In other instances we have helped. There is a patchwork of organisations here and there but there is no dedicated place where one can go to help formulate one’s complaint. That would be a help to start with, because obviously if a complaint gets off on the wrong foot and one does not make the appropriate submissions and word things carefully it can affect the complaint.

That is one concrete thing that could be done. There is also no database of decisions available. If a consumer wants to make a complaint about a particular issue one should be able to log on to a part of the website and see how similar issues might have been treated previously to help one formulate one’s arguments. An appeal to the Circuit Court is not ideal but it is preferable to a limited appeal to the High Court where the risk of substantial legal costs is high.

As I am sure Deputy Boyd Barrett knows, our organisation also works very much to reform the civil legal aid system. We are also of the view that people should be able to apply for and receive civil legal aid in appropriate cases for appeals to the Circuit Court. In addition, we say the appeal to the Circuit Court should follow the normal fashion of appeals. Although the decision is made by the ombudsman, the appeal should be against the financial service provider. That would normally be the case, for example, with unfair dismissal cases. What happens at the moment is the Financial Services Ombudsman acts as the respondent to appeals and comes into the High Court to defend the office's decision. That is unnecessary in many instances.

There is a fundamental problem of expertise on the part of the institution. In a lot of cases people felt they were being thrown a lot of technical paperwork which was obscuring their complaint. A number of people felt that an oral hearing where they could be in the room and address questions to the people they dealt with and have somebody listen to the case would address their complaint much more comprehensively and they would feel much more vindicated rather than going through a paper process.

Ms Noeline Blackwell

Deputy Boyd Barrett is absolutely correct about the whole business of inequality and the feeling that one is up against a big, powerful organisation. That is a real problem of the legal aid system in general. The legal aid system could give assistance in the Circuit Court but because of delays and the rest of it, may not and is prohibited by law from giving assistance in a complaint to the ombudsman. If I go to the Legal Aid Board - the State-funded legal aid service - and say I want help in bringing my case to the ombudsman it cannot give me representation.

The ombudsman system is probably much better than having to go into court on day one. It is free and it is supposed to be utterly independent. The blocks are in how one gets there, exactly as Mr. Joyce outlined. The independence of the ombudsman disappears when he goes into the High Court and goes on-side against the consumer who is bringing the appeal, which has been our invariable experience. The appeal is not against the company that made the decision in the first place; it is taken against the company and the ombudsman. The ombudsman fights the case so one risks losing and paying two sets of costs. That is an entirely impractical system for most people who cannot be assured of success at the far end of it.

We also have exactly the same problem in relation to people trying to negotiate with their banks. At a different stage we spoke at a different committee about the imbalance of power where people are not supported by any State assistance or bank assistance unless they are lucky enough to be with MABS or an advocacy agency, which is very hit and miss.

Mr. Paul Joyce

I have one further short point. The Central Bank’s consumer protection code obliges all regulated financial service providers to have a complaints mechanism within the organisation which one can access. The wording of the code is curious. It suggests that a regulated financial services provider must attempt to resolve a complaint within 40 days. Practically speaking, a lot of the complaints are not resolved within that eight week period and take substantially longer. From the evidence we saw, many people give up hope before they even get to the ombudsman because they feel stonewalled by the provider itself. If a case is strung out then people will eventually give up rather than follow through. Something must be done to monitor the code to ensure the timelines are shorter and they are strictly adhered to, as at the moment that is not properly monitored.

Deputy Aengus Ó Snodaigh

This is an area of interest because a number of people have contacted me and I have tried to help them put together a complaint where a service has not been delivered. PayPal is one of the companies that is very difficult to deal with. If one’s account is affected, due to no fault of one's own, through fraud at another end, one cannot access PayPal in any shape or form. People try to get an appeals mechanism in place. Reference was made to companies attempting to resolve cases within 40 days. In the case of PayPal and probably other companies a reply is made outlining an initial finding and stating that more time is required. When the complainant offers more time that is usually the last he or she hears about the case, as in the two cases with which I am familiar. The consequence is that someone with an online business has his or her account suspended. There must be a way to ensure that such consumers can complain properly or appeal to the Financial Services Ombudsman if the complaints system is not working.

Reference was made to a number of areas in which legislation must be tightened up. The committee could help to encourage the Minister for Finance to look at that.

As individuals we can see if we can try to ensure that where there are faults in financial legislation, as we have highlighted today, we can examine them. This should happen particularly with regard to consumer protection, which is vital. I was elected in 2002 and it struck me at the time that a credit company operated in my area, and I complained about the 195% interest being charged. There was a different regulator at the time and when I inquired about this, I was told that although it came within its remit, there was no entitlement to restrict interest rates charged by companies. The regulator would have ensured they operated legally none the less. No institution should be entitled, with a licence from the State, to charge exorbitant annual percentage rates over 30%. Some of these companies charge over 200%. Given where we have come from and the indebtedness of our society, the issue must be addressed.

It is useful for others to raise this matter, as the more voices we hear, the more this side of financial regulation will be used to limit what interest can be charged. Institutions should not be able to get away with some of the costs not just in interest rates, but also in collection rates. If a company is forced to reduce interest rates, it may increase collection rates to make up the 200% rate. Some of these operations have little more than signs and one could have difficulty in accessing the company or complaining about a lack of service given to a consumer. I will look with interest at how this is received and whether we could get the Minister for Finance, in particular, to take on board these issues. Valid questions and proposals have been raised, and they relate to some of the problems that led us to the current crisis. There was a lack of regulation and oversight, and the more of this that is available to a consumer, the less likely we will end up with people struggling. Part of our job is to ensure all ombudsmen have the required tools to deliver for the consumer and citizen, so we should take this report on board.

Ms Noeline Blackwell

As the Deputy noted, the interest rate charged by moneylenders is horrendous. It is a particularly pertinent point, as every Deputy knows, especially when other forms of credit are so limited right now, including credit union loans and other normal low-cost credit forms. With regard to legislation, some of the points are net and could be dealt with reasonably easily. For example, the business of hire purchase companies not being regulated seems to be an amazing oversight, especially when every third advertisement is now about hire purchase. It seems to be a worrying trend that the protection for consumers for one of the few forms of credit available currently is simply not good enough but could be fixed very simply.

Mr. Paul Joyce

The point about the cost of credit is valid. As Deputy Ó Snodaigh has indicated, these are mainly licensed moneylenders; they would apply for a licence and state on the application what they intend to charge. If the State grants the licence, they can charge whatever is permitted in the licence. There is a question regarding the cost of credit being too high but Deputies will know that some people would use moneylenders routinely as their only source of credit. It can be a difficult question. The annual percentage rates are far too high.

The report also identifies that during the boom years, particularly from 2004 onwards, many sub-prime lenders - both mortgage and personal lenders - entered the market. There is an illustration of an agreement which we dealt with on page 7. I will spare the committee the details but it was a top-up loan, which licensed moneylenders are not allowed to charge for. It involved a credit institution from outside the country which came in by "passporting" on its banking licence. It offered a personal loan over seven years at an outrageous rate of interest, topped up the loan and loaned the borrower money for payment protection insurance, which was prepaid for the full duration of the agreement. It was absolutely scandalous and the cost of the credit was outrageous.

Such cases went by without any regulation. The institution was a credit body for the purposes of the consumer credit legislation and it could do as it wished. There is a gap in consumer credit legislation that means credit institutions do not have to get a licence to charge over 23% annual percentage rate, although moneylenders do. That is a simple change that could be made to the legislation tomorrow. During the course of the boom, certain business names of certain banks were offering credit agreements at over 23% annual percentage rate, and not just banks coming in from outside.

The report details that sub-prime lenders were authorised by statutory instrument to be housing lenders for the purposes of the consumer credit legislation, with no other controls placed upon them. They are responsible, although not alone, for many of the difficult arrears cases. They became retail credit firms in 2008. This is what is being proposed for the unregulated entities which have bought loans from others, and Deputies are aware of the consultation which has just finished with the Department of Finance. Legislation is due from that. We just do not seem to get there on time and we seem to be behind all the time in putting in place necessary protection.

Deputy Michael P. Kitt

I was going to raise the hire purchase issue, as finance companies are not regulated. FLAC has raised the matter with the Central Bank and the Department of Finance but has there been a response? Perhaps this was dealt with before I arrived. What are their duties in this respect? During the summer there was much debate about life assurance and I heard it being discussed quite a bit on the "Liveline" programme. Terms were changed regarding the amount of premia that would have to be paid in order to maintain insurance levels; in some cases if premia were not raised, the cover decreased.

I have a question about FLAC offices, particularly in Galway city, where a very fine service is run. There is an issue with resources and staffing. Perhaps the witnesses do not want to deal with that but I would appreciate if they could tell me something. I am fully supportive of the work but there have been some complaints at policing committees I attended that sometimes people get too much free legal aid. For example, repeat offenders may get free legal aid on a number of occasions, and this is not the way to go when tackling crime. I am somewhat outside the issue being discussed today.

Chairman

Yes, although I am giving some poetic licence.

Deputy Michael P. Kitt

Perhaps there can be some comment as the issue will arise again, I am sure. I thank the Chairman for his leniency.

Chairman

If Deputy Kitt were in the Chair in the Dáil, he would not give such latitude.

Mr. Paul Joyce

With the hire purchase issue, one is entitled to a hire purchase agreement in writing and in full. Sometimes it is not provided but as I mentioned, the area is not being properly policed by the Central Bank.

However, the lender is not obliged to do the proper due diligence on the borrower's income, other credit agreements, capacity to service the agreement and so on.

During the boom hire service was a major source of over-indebtedness and they are quite technical agreements. For a start, the person does not own the vehicle until he or she makes the final payment, which many people did not understand. Some people sold on vehicles with disastrous consequences. It is an area where the maximum information and protection is necessary. Given that the entities are not regulated, even some garages have started to go on solo runs and do their own HP because they have seen the possibility of doing so. Normally they were credit intermediaries acting for institutions.

We have raised this. We have had meetings with representatives of the Central Bank and had meetings in the Department of Finance. Nobody is saying it is a bad idea to regulate them. It just seems to take a huge amount of time to get around to doing what people seem to accept should be done. The technical explanation is that hire purchase is not credit, according to the Central Bank. Of course it is credit because people are paying in instalments usually over 60 months with an interest payment. It is a rental so it is a bit of a subtle distinction, but it is not a distinction that stands up in practical terms.

Our feeling is that when something needs to be remedied quickly and it is of consequence for financial institutions, it tends to be done. When it is a consumer issue, it tends to take a long time. Nobody has come back and said there is a good reason for not doing this, but it still has not happened.

Was Deputy Kitt's question on life assurance related to mortgages or just life assurance policies generally?

Deputy Michael P. Kitt

I think that people might not have read the life assurance small print.

Mr. Paul Joyce

Those are the terms and conditions. Financial agreements are generally pre-drafted on behalf of the institution in question. There is a considerable amount of small print and people enter into these agreements without fully understanding what they involve. The National Consumer Agency has been quite helpful in providing information on its website and so on, but people do not always have access to the Internet. There is a set of regulations, the European Communities (Unfair Terms in Consumer Contracts) Regulations, which can be used by consumers to point to unfair pre-drafted terms in contracts. That is something that might be looked at and the National Consumer Agency is quite active in that regard. People can seek to have an order made that a term in an agreement is unfair because it is deliberately imbalanced against the interests of the consumer.

There is also an issue relating to life assurance and mortgage arrears because people are entering into rescheduled agreements and either their mortgage protection has lapsed or they have not readjusted their mortgage protection policies.

Ms Noeline Blackwell

On the question of us and the Legal Aid Board, we do not set out to be confusing but we are confusing. We are the Free Legal Advice Centres and we only have one office in Dublin, and Mr. Joyce and I comprise about a fifth of the staff. The State-funded Legal Aid Board is what provides the general State representation. That is a fully State-funded body. We have huge admiration for all the lawyers who work in that, but we are not them. We give a volunteer service in citizens' information centres in evening clinics as well as in NUIG.

We know that the State-funded Legal Aid Board cannot deal with this area - if I want to draw it back into this area a bit - or any other area as well as it would like because its demand has doubled over the period of the recession. It has had reduced resources and employment frameworks which limit the number of people who can do it. As a result, our concern, as a small voluntary non-governmental organisation seeking equal access to justice, is that in this area as well as in others people are not able to access the information they need at the time they need it in order to resolve their own affairs. Returning to what Deputy Boyd Barrett said at one stage, people then build up huge unnecessary disputes sometimes where proper access to legal aid and representation would give them a better outcome.

Returning to the ombudsman, if people could get to the ombudsman in an informed way so that they knew what they were doing when they brought their complaint and could understand the process they were going through, they would be likely to have more faith in it, provided the resolution was one they could depend on. That is not the case at the moment but it is fixable.

Chairman

There is no database of decisions by the Financial Services Ombudsman. How can we, as legislators, be aware of the scale of the problem if we do not have the necessary statistics? For example, how can we identify if there is a problem in the hire purchase area or with personal loans?

Mr. Paul Joyce

The ombudsman publishes biannual reviews and publishes an annual report and occasional case studies. On the website, ironically, there is a list of the High Court appeals, but there is no database of decisions broken down by category to give an indication of where there may be problems. Decisions are published from time to time but as case studies, so there is no reliable database in place. This is not the only area with issues of access to social justice; we have pointed out the social welfare appeals office.

To be fair, we have had some engagement with the FSO since the report was published and it is looking at some of the issues. It is considering rejigging its website and improving certain elements of it, but it was not particularly keen on developing a database. Obviously, there is a fair amount of work involved, but given that there are 7,000 to 10,000 complaints a year, people are entitled to guidance as to how to frame a complaint.

Ms Noeline Blackwell

While the ombudsman would claim it is not bound by all its previous decisions, how can we know there is consistent decision making within it without that information? There is a model which is not totally satisfactory but now works in the immigration area. The Office of the Refugee Appeals Tribunal has a database it can make available to people. If I am looking for the tribunal's decisions on a specific issue, I can ask it for that. I will not see everything on its website, but if I have a particular concern, I can see it. That is a model that has been adapted and used, and seems to be satisfactory without being too top-heavy on cost.

Chairman

People think of the ombudsman as the impartial judge based on its translation from its Nordic origins. It is an independent arbiter that looks at the complaints, gives the body that is being complained about a chance to respond and then adjudicates and makes a recommendation. I know the witnesses have a number of recommendations in the report on the Financial Services Ombudsman. Would they prefer that to the existing model?

Mr. Paul Joyce

I believe the ombudsman would say that is the model that exists right now in being independent and not taking sides. It should evaluate the evidence and make a recommendation which can be subject to appeal. That is fine in theory, but in practice because the consumer is coming from a position of much less knowledge, that creates of itself an imbalance. We need to consider ways to ensure that the consumer complainant is more empowered and that the procedures adopted by the FSO are less formal and less weighed down in paperwork which the complainant finds difficult to understand.

Some of the respondents made complaints on their own behalf. One person, who was very experienced in financial matters, found the system very difficult to navigate. He said at interview, "I can only imagine what it is like for people who are not familiar with this kind of stuff". The area of financial services is complicated and the consumer definitely needs assistance from the outset. It would make a big difference if there was a dedicated place for them to go to get assistance to formulate the complaint.

There should be more oral hearings.

A number of the respondents said: "I really wanted to express how frustrated I was with how the institution dealt with me, how I was stonewalled, how I was not getting answers, how I was sent from Billy to Jack and I did not get that opportunity." The Financial Services Ombudsman was saying that if we have to have oral hearings in every case, it will affect our throughput of cases and so on, but again an oral hearing is an access to justice issue, the opportunity to articulate one's complaint. I think it is about improving the service. In principle it is fine, but in practice it needs a great deal of improvement.

Ms Noeline Blackwell

At the far end the ombudsman makes the decision and then stays out of any appeal. The ombudsman has adjudicated at that stage. We find it difficult to understand why the office of the ombudsman needs to go into most appeals. They might need to go into the odd one as an expert to explain some rationale, but for the most part that detracts enormously from the perception of their independence.

Mr. Paul Joyce

To add to that, what is provided for in the legislation is that the ombudsman may be a party to the High Court appeal. In our view it should not be an appeal to the High Court. What has happened in practice is that the ombudsman is the respondent in every High Court appeal and we have been involved in a few ourselves.

Chairman

As the witnesses from FLAC may know, the context of its presentation today is that we are working on one of our public petitions that is challenging the secrecy of the Central Bank's financial regulator and the issue of accountability around the process and the outcome. Does FLAC have a perspective on that?

Mr. Paul Joyce

That is an interesting topic. I have had a quick read through the recent discussion of 9 July. The administrative sanctions programme which was referred to fairly frequently throughout the submission that was made to the joint committee is the Central Bank's way of dealing with financial service providers who may breach standards and so on. Our experience would be similar. The process takes place behind closed doors, where the provider can opt for a settlement. The focus seems to be on settlements rather than on prosecutions of any kind. There is some material in the report, in which representatives of the Central Bank say that is the most cost effective way of doing this. Our overall impression would be that in the realm of financial services, different standards apply, that the financial service industry is unduly protected and, on the other hand, the consumer has fewer rights than they might have in other areas. We have had experience of writing to the Central Bank looking for details of how it arrived at sanctioning certain bank charges. It is very difficult to get information. Members may be aware of the famous section 33AK of the Central Bank Act 1942 is constantly referred to and it seems there is a kind of shield of confidentiality over everything.

As the petitioner at the recent meeting of the joint committee said, that is understandable for prudential issues and there are certain issue that have to remain confidential, but it seems to be a kind of confidentiality shield across the board, which is way over the top in our view.

Ms Noeline Blackwell

A personal bugbear of mine is that the Central Bank's strategic plan specifically names the strengthening of consumer protection, that is, the protection of consumers of financial services, as one of its high level goals. It seems to us that this is interpreted from the side of bankers looking at how they perceive consumers should be protected in financial services rather than from a consumer perspective, even to the point of outsourcing its own information function to the National Consumer Agency. It always seems extraordinary that one goes to the Central Bank and one cannot get an answer. One will be directed elsewhere, either to the National Consumer Agency or to the Financial Services Ombudsman. That strategic plan the Central Bank has developed is until next year. One of the things we would like to see the Central Bank doing is being more relevant to consumers. The Central Bank has an advisory panel but consumers seem to be always viewed from the perspective of bankers. We would like to see others ask the Central Bank how it would look to the consumer perspective and consumer rights when developing its next plan.

Mr. Paul Joyce

Let me give a brief example. If tomorrow morning I wanted to log on to the Central Bank's website because I want to apply for a personal loan and I want to choose between the terms offered by different lenders, there is no one place that I can go to find out what default interest rate bank A charges on personal loans as opposed to another bank or what kind of charge is made for direct debits missed and so on between bank A and that bank. The reason that information is not there is ostensibly because of confidentiality. That is not confidential information. That information should be in the public domain to enable people who are availing of financial services to make a choice between one provider and another.

Chairman

On behalf of the joint committee I thank Ms Blackwell and Mr. Joyce for attending today's meeting and for engaging in a most interesting and wide-ranging discussion. We are very grateful to both of them for taking the time to meet the committee and we will take account of the exchanges in our deliberations. We will publish a report and of course we will have to deliberate on the petition at a later stage.

The joint committee went into private session at 5.05 p.m. and adjourned at 5.20 p.m. until 4 p.m. on Wednesday, 24 September 2014.