We have been through a lot of this already and improved the legislation significantly. The add-on is the merging of the two offices. In the light of how far we have come I hope and anticipate that the co-operation there has been will continue.
This Bill aims to improve the position of consumers of financial services and pensions services in a number of respects. It does so by first amalgamating the existing offices of the Financial Services Ombudsman and the Pensions Ombudsman into one single body. Furthermore, it consolidates and updates the existing legislation, including the extension of the time limits for complaints. I believe the Bill is a significant step in the empowerment of consumers of financial and pension services when it comes to addressing their complaints. There has been much cross-party co-operation in the Dáil on this Bill and I am sure this facilitative environment will continue in the Seanad.
I also acknowledge the passing of Sinn Féin’s Central Bank and Financial Services Authority of Ireland (Amendment) Bill in the Dáil last Friday. The Minister for Finance and the Department of Finance have worked closely with Sinn Féin and tabled amendments to try to ensure both Bills are complementary in areas where they overlap. However, the provisions of Sinn Féin’s Bill will be repealed once this Bill is commenced as this Bill moves the legislation from the Central Bank Act into stand-alone legislation.
I will outline the key features of the Bill.
A list of important definitions is contained in section 2. Chief among them are the definitions of a "consumer" and of a "long-term financial service". The definition of a consumer of financial services in this Bill has been expanded to include those who are entitled to benefit from income continuance plans, ICPs. In ICPs, the employer takes out the group scheme for the benefit of employees who may become ill or disabled long term. The contract is between the employer and the insurer. The employee is not a party to the contract. Therefore, up to now, employees could not complain to the ombudsman about a decision to exclude them from a benefit under the scheme. By including beneficiaries of ICPs in the definition of a consumer, such employees are now entitled to seek redress from the ombudsman.
The delineation of what constitutes a "long-term financial service" is of central importance to this Bill. That is because the proposed extension of the time limits within which a consumer can make a complaint will only apply to long-term financial services, as well as pension products. Therefore, it is necessary that a suitably precise and comprehensive definition be adopted in this Bill to ensure the desired types of financial products come within this definition. I believe we have achieved this with our current definition of a long-term financial service. It includes all financial services or products of a fixed term of five years and one month or more such as mortgages, tracker mortgages and long-term loans. It also covers life assurance products. The definition also provides for the avoidance of doubt that annual products like car and house insurance are not included as long-term financial services. The existing six-year time limit should be sufficient time to bring complaints in respect of short-term financial services. The definition is the same as that which was agreed in this House last week in the discussion of the Sinn Féin Private Members' Bill following Report Stage of the Government's Bill.
Parts 2 and 3 of the Bill set out the provisions for the creation of the Office of the Financial Services and Pensions Ombudsman, as well as the dissolution of the existing bureau, the Financial Services Ombudsman and the Pensions Ombudsman. It must be noted that the offices of the Financial Services Ombudsman and the Pensions Ombudsman have already been physically merged in one location at Lincoln Place. Mr. Ger Deering is the Ombudsman in both offices pursuant to section 23 of the Social Welfare and Pensions Act 2015, which allowed the Financial Services Ombudsman to act as the Pensions Ombudsman. Section 12 of the Bill provides that the principal function of the Ombudsman is to investigate complaints by informal means, mediation and formal investigation, including oral hearings, if required or a combination of these means.
Part 4 of the Bill establishes and regulates the Financial Services and Pensions Ombudsman Council. It will supersede the dissolved Financial Services Council, with some important modifications. The Council has now been reduced from a maximum of ten members to a maximum of seven members. This reduction is reflective of the changing workload of the council under the Bill. The regulation-making power of the council has been transferred to the Minister for Finance. Additionally, the responsibility of appointing the ombudsman and deputy ombudsman is now also the task of the Minister rather than the council, after a public competition. It is preferable that these powers should be vested in an entity that is democratically accountable. The Minister may consult the council before making regulations under section 4. The role of the council is set out in section 40 and it includes keeping under review the efficiency and effectiveness of the office. The council retains the powers to make regulations to set the financial services industry levy, which is to be calculated according to the amount of cases concerning financial services in the previous year. This levy is one of the two sources of funding for the Office of the Financial Services and Pensions Ombudsman, the other source being the Exchequer in accordance with the existing funding structure of the Pensions Ombudsman.
Part 5 of the Bill governs the procedures for the making of a complaint by a consumer and the powers of the ombudsman in conducting an investigation. In respect of the conduct of a financial service provider, a person can complain about the provision of financial services, an offer of financial services or failure to provide financial services. In respect of the conduct of a pension provider, a person can complain about financial loss or a dispute with regard to pensions.
The steps for resolving a complaint are contained in more detail in Part 6 of the Bill. Similar to the existing legislation, consumers will first be asked to try to resolve complaints with the internal resolution procedures of a provider. Section 55 now enables the Minister for Finance to prescribe minimum standards for such procedures. This may minimise a consumer's need to lodge a complaint with the ombudsman in the first instance and may lead to faster resolution of the complaint.
Section 58 stresses the importance of mediation in resolving complaints that proceed to the ombudsman. The text of this section was much discussed in the Dáil and in this House during the passage of the Private Member's Bill with the Government's amendments made on Report Stage in the Dáil. The current wording was arrived at with the consensus of all parties. I thank the other parties for engaging so productively on this issue. I believe that the current wording of section 58 should reinforce the encouraging current trend of nearly 60% of complaints being resolved by mediation.
The extension of the time limit is a key feature of this Bill and had been flagged for some time in the public consultation in 2015 and the heads of Bill published in 2015. Under the old regime, a consumer had to make a complaint within six years of the occurrence of the conduct complained of. Section 51 of this Bill proposes to modify that time limit by providing that a consumer of a long-term financial service may also make a complaint within three years from when he or she first became aware, or ought to have become aware of the conduct complained of if that was later than the standard six years from the date of the conduct. Furthermore, the ombudsman retains the discretion to extend the time limit for the making of a complaint in respect of long-term financial services in circumstances where it seems just or equitable for him or her to do so. The rationale for extending the time limits to long-term financial services is because consumers of a long-term financial service may not be aware of a problem until the maturity of the product, which could be long after six years from the date of the conduct in question. On the other hand, a problem with a short-term financial service should manifest within the six-year time limit already provided for.
The new time limits also apply to conduct that occurred in the past. Consumers will now be able to complain about conduct stretching back 15 years to 2002, provided that the long-term financial service in question has not expired or been terminated more than six years before the complaint. This could include complainants who have previously have had their complaints dismissed by the ombudsman in the past due to the conduct complained of falling outside the previous six-year time limit and who make their complaint within the new time limits. The decision to apply this 15-year "long stop" was inspired by the long stop recommended by the Law Reform Commission when it discussed introducing a discoverability test to extend the time limit for making personal injury claims. The use of these proposed time periods was arrived at on foot of extensive research by the Department of Finance. It is the result of a comprehensive process of engagement with numerous stakeholders, public consultation and advice from the Attorney General and I am sure Senators will agree it strikes the appropriate balance necessary to protect the consumer in a practical way.
A notable improvement in the Bill is the provision for increased communication between the ombudsman and the parties of a complaint. The ombudsman can now issue preliminary decisions and explain certain decisions during the investigating process, such as decisions on whether to hold an oral hearing. This will increase transparency for both consumers and providers. Most significantly, in section 62 there is provision for the publication of the ombudsman financial services decisions, with names redacted, which should ensure an optimal balance between promoting transparency and the operations of the ombudsman and protecting the privacy of complainants.
The Bill introduces a number of important changes to the current regime. Chief among them is the consolidation of the Financial Services Ombudsman and the Pensions Ombudsman into a single office. The provisions contained in this Bill will considerably improve the position of consumers, especially the new time limits with regard to long term financial services.
I thank all the political parties for engaging in a constructive debate on these issues during the Stages in the Dáil and thank Senators for their contribution to the debate on the Private Members' Bill last week. These contributions have resulted in a Bill that I believe will be embraced by this House. I am satisfied with the Bill, as it stands, and commend it to the House for further discussion.
I think this was the first piece of legislation I took here. I told the House that I would be as accommodating as I could be to ensure we got the best legislation possible and that still stands. I hope the level of co-operation we have had today will continue. The legislation is better for it. There had been some confusion last Friday on how we had got the legislation back to the Dáil to be concluded there, but all parties co-operated and we got through the process quite painlessly. I commend the Bill to the House.