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Financial ombudsman – The Irish Times Opinion (reference to PIBA Guidelines)

04 November 2011

The need for a Financial Services Ombudsman is apparent from the sizeable workload of the office, and from the ombudsman's success as an effective adjudicator of complaints made by members of the public who are unhappy about their treatment by financial service providers, including banks and insurance companies.

The ombudsman, Joe Meade, can redress wrongs, and make compensation awards up to €250,000. In the year to June, he received 2,700 public complaints, a third more than the same period a year ago. This surge in activity by so many aggrieved clients of some financial services providers partly reflects the downturn in the economy, but is mainly explained by the new Consumer Protection Code, which establishes clearer procedures for those seeking redress.

The elderly, and those with limited money management skills, are at particular risk of being duped by unscrupulous financial sales operators. They can all too easily become the victim of misselling, buying investment products they may not fully understand, or that are simply unsuitable, given their age and financial circumstances. In a recent case Mr Meade found that two insurance agents who sold health policies to an elderly farmer living alone had subjected him to unfair pressure. To expedite matters and to complete that sale, one agent drove the farmer to a bank cash machine to withdraw money to pay for the premiums, while the other agent remained in the house. The policies sold were found to have been quite unsuitable. Premium payments the farmer made were refunded to him, and he received compensation.

The misselling problem, Mr Meade accepts, is not a systemic one; nevertheless it remains a serious concern. It may not be happening on a daily basis. But it is an unacceptable feature of the behaviour of a very few in the financial services sector. The Professional Insurance Brokers' Association (PIBA) has recognised this. And, in response to the ombudsman's criticisms, it has issued guidelines to its 900 members outlining how these investment products should be sold to old and vulnerable clients.

The ombudsman in his review has noted that financial institutions and insurance companies have featured prominently in the public complaints received. The willingness of some financial companies to contest valid complaints made by their clients, which are later upheld by the ombudsman, makes little sense. Surely a company concerned for its professional reputation should, as a first resort, attempt to settle these disputes internally through its own procedures, and avoid forcing their clients, as a last resort, to appeal to the ombudsman for the justice they have been denied.