Thousands of consumers of financial products are being denied access to the Financial Services Ombudsman (FSO) because of a restriction in the legislation which prohibits the FSO from dealing with complaints concerning financial products sold more than six years ago, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath was speaking following the publication of the FSO’s annual figures for 2014.
Deputy McGrath stated, “I welcome the publication of the FSO’s annual report for 2014 and the positive impact the new powers to ‘name and shame’ errant financial service providers is clearly having. These new powers were introduced in 2013 following sustained pressure from Fianna Fáil to hold financial service providers to account in public for their complaints record. The next step now is to address the six year rule which is denying tens of thousands of consumers the right to take a complaint to the FSO.
“The FSO, Mr Bill Prasifka, has confirmed in correspondence with me previously that about 1,000 consumer complaints – 12% of the total received every year – fall outside of the six year rule and cannot be handled by his office. On top of this, we know that many consumers with legitimate grievances that fall outside the six year rule will simply not even refer it to the FSO. We can safely conclude that there are tens of thousands of consumers in the country who believe they have been sold defective financial products but are denied access to the statutory ombudsman established to deal with such complaints.
“Evidence of this lies, for example, in the Central Bank investigation into the mis-selling of payment protection insurance (PPI) policies. As a result of this investigation, which only dealt with PPI policies sold after 1 July 2007, a staggering 77,000 policyholders were collectively refunded €67m. The question arises as to what recourse is available for people who bought PPI policies prior to July 2007? At the moment, there is none it seems.
“Such is the nature of many long term financial products – including investments, payment protection insurance policies and endowment mortgages – that problems only emerge well beyond the six year limit. It is grossly unfair that these consumers are being prevented from having their case heard by the FSO. Another consequence of the rule is that financial services firms who have mis-sold products to unsuspecting consumers continue to get off scot free.
“In 2013, Fianna Fáil published a Bill to deal with this issue. The Bill proposes that, from the time a person becomes aware of a problem with the financial product, they would have three years to lodge a complaint with the FSO. We are calling on the government to make the necessary change in the legislation to deal with this injustice currently being experienced by thousands of consumers of financial products.”