Financial Services Ombudsman Irish Experience William Prasifka - - PowerPoint PPT Presentation

Financial Services Ombudsman Irish Experience

William Prasifka Financial Services Ombudsman 9 October 2012 Financial Ombudsman Institute, Armenia

Introduction & Background

FSO Role

Independent adjudication on unresolved disputes between Complainants and Financial Service Providers (FSPs) thereby enhancing the financial services environment for all sectors

Background to FSO

• Established in 2005 under The Central

Bank and Financial Services Authority Act 2004

• Successor to voluntary ombudsman

schemes for credit institutions and the insurance sector in early 1990s

• Recognition that a complaints resolution

process outside of the Courts was necessary and appropriate

Points to Note

• Fair adjudicator of complaints against

regulated FSPs

• Not a consumer advocate
• Not an industry advocate
• Free Service – can engage professional

advocates at your own expense

Power of the FSO

• Investigate /Adjudicate complaints
• Award compensation up to €250k
• Direct Rectification (No € Limit)
• Findings - legally binding, appealable
• nly to the High Court

Organisations Subject to FSO Investigation

• Banks
• Building Societies
• Insurance companies
• Credit Unions
• Mortgage, Insurance and other credit

intermediaries

• Stockbrokers
• Moneylenders
• Credit sales companies
• Leasing companies

Who can complain to the Ombudsman?

• All personal customers
• Limited companies with a turnover of

€3,000,000 or less

• Unincorporated bodies, charities,

clubs, partnerships, trusts, etc.

Complaints outside Jurisdiction

If the conduct complained of:

• Is or has been the subject of legal proceedings before

a Court or Tribunal

• Occurred more than six years before the Complaint

was made

• Is within the Jurisdiction of the Pensions

Ombudsman

Discretion to discontinue investigation

If the complaint is:

• Frivolous, vexatious, not in good faith
• Trivial
• Alternative and satisfactory forum

available

• Complainant has no / insufficient interest

in conduct being complained of

Complaint Experience

Complaint Trends – Context

1000 2000 3000 4000 5000 6000 7000 8000 2006 2007 2008 2009 2010 2011 2012 ?

?

Total Complaints Received

Overall Complaints, Up H1 2012

Complaints Recd – By Sector

Complaints Experience

• Insurance Sector – 50% of Complaints
• Insurance – PPI largest increase
• In Banking – mortgage complaints make

up approx 40% of all banking complaints

• Investment complaints – alleged mis-sale

& Investment Performance

Outcome of Findings - Overall

Outcome of Investment Findings

Outcome of Banking Findings

Outcome of Insurance Findings

Recent Issue - Ulster Bank

Ulster Bank – IT ‘Glitch’

• ‘Computer Meltdown’
• Transactions not processed
• ‘600,000’ customers directly impacted
• Impact on Non-UB customers
• 2 weeks’ duration

FSO – Response

• Encouraged Early Resolution
• Address Complaints Quickly
• Effort to address Complaints without need

for referral to FSO

Ulster Bank Complaints

Complaints Received July = Approx 150 August = 60% Less Sept – Dec = ?? Complaints must go through UB Complaint process before referral to FSO

FSO Experience with Judicial System

High Court Appeals

• FSO Findings – Appealable to High Court
• Both FSP and Consumer entitled to appeal
• Currently – Approx 40 HC Appeals (1%)

Courts hold FSO to High Procedural Standard

• Substantial experience before the Courts
• Full exchange of submissions & opportunity of

parties to respond

• Procedures / investigation must reflect the

remedy directed

• Request for discovery and jurisdiction must

be fully considered

High Court Appeals – Standard of Review

Not a ‘de novo’ review “To succeed ... must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors...“

Ulster Bank Investment Funds Limited v Financial Services Ombudsman, 2006

‘Lyons & Murray’ Case

• “…a material disputed question of fact could only be resolved by

an Oral Hearing…” – Paragraph 29

• “Once [FSO] proceeds to adjudication, a legal Rubicon is …
• crossed. As agent of the State, [FSO] is thereby bound to uphold

the constitutional right to fair procedures…This has further consequences, for…the resolution of the question of whether there should be an oral hearing is not a matter which goes directly to the specialist expertise of the [FSO] so that the deference to that expertise as enunciated by Finnegan P. [Ulster Bank Case] is simply not applicable in this case” – Paragraph 38

• Supreme Court Appeal

Judicial Support for FSO

“What has been established:

• [FSO] is an informal, expeditious and independent

mechanism for the resolution of complaints ...

• not engaged in resolving a contract law dispute in the

manner in which a court would engage with the issues ...

• can also make orders of a type that a court would not

normally be able to make ...

• possesses a type of supervisory jurisdiction not normally

vested in a court.”

Hayes v Financial Services Ombudsman & Ors – 2008

Judicial Support for FSO

• Unique Jurisdiction
• ‘Plain Language’
• Confirmation that the purpose of the FSO is to

keep the process of dealing with quantum of complaints, so far as possible, out of the court.

• The Ombudsman is not the correct forum for a

party who wants court style remedies

• Courts do not ‘second guess’ awards

Conclusions

Complaint Trends & Outcomes

• ‘Paradigm’ Shift
• Consumers’

awareness and willingness to complain

• Product types / complaints may change...

...BUT Complaints remain at record levels

• Increase in challenges to Findings (Legal / Non

Legal)

• Indications are for an increase in Complaints

Not all FSPs are Alike

Best Performers

• FSO upholds < 10%
• Awards – Small
• Cases Upheld – Difficult / Novel

Worst Performers

• FSO upholds > 40%
• Awards – Large
• Cases Upheld – Recurring Issues

No Evidence of Convergence

Legislative Amendments

• At the moment - FSO cannot identify

complaints records of individual Financial Institutions (FSPs)

• Problem: FSP Management of Claims /

Recurring issues

• Solution: Publication of Claims Record of

FSPs

Legislative Amendments

• Consultation Process re Legislation
• Cross-party agreement to change FSO

Legislation

• Consumer Interest not best served by

inability to publish records of individual Institutions

• If legislation amended, clock reset to zero

Customer Engagement

• FSPs must actively manage complaints
• Earlier intervention, before complaint

elevation

• Industry must internalise FSO methodologies
• Refer to published Data / Guidelines
• More settlements
• Review processes to reduce complaint

numbers

Thank You Any Questions