Fianna Fáil Finance Spokesperson Michael McGrath has called for a review of the rules on mis-selling of financial products following publication of figures that show a significant fall-off in the number of complaints upheld by the Financial Services Ombudsman.
“Figures supplied to me in a reply to a parliamentary question indicate that in the last 3 years less than 40 complaints of mis-selling have been successful. This is out of a total of over 1,300 cases brought before the Ombudsman,” said Deputy McGrath.
“The numbers are declining year after year. It would be nice to think that this is because of scrupulous actions on the part of financial institutions in ensuring that customers are only sold products which are suitable for their financial needs. However in practice the balance of proof appears to fall very much on the customer, while banks and investment firms are able to escape sanction for very poor quality advice.
“Financial services firms have consistently acted in a manner contrary to the interests of customers in a range of issues. These have included the sale of endowment mortgages, savings products with high up front charges and payment protection insurance to those ineligible to claim. There have been high profile cases recently which demonstrated a flagrant disregard by firms for the interests of their customers. In some instances it would seem the sole motivation of firms is to collect their fee with little regard for the long term interests of their client.
“Financial institutions will always claim that they received customer consent that the product the person was sold was suitable for their circumstances. In practice we know that there is a huge information gap between banks, insurance companies and investment firms on the hand and their respective clients. It’s often the case that people feel justifiably aggrieved that they did not fully understand what they were buying, particularly in the case of complex products. A signature on a piece of paper should not absolve firms of their responsibilities. Given the potentially serious implications for an individual of making an inappropriate investment decision, I believe we need a greater burden of responsibility on the sellers of financial products.
“I am calling on the Minister for Finance to undertake an overhaul of the rules governing the sale of financial products to ensure a greater degree of protection is afforded to customers. In cases where a customer has a justifiable grievance, an efficient remedy must be available to them.”