Ombudsman to name and shame banks

The Financial Services Ombudsman will soon have the power to name and shame the institutions that it investigates, according to the finance minister.

Michael Noonan wrote to Fianna Fáil finance spokesman Michael McGrath to confirm he intends to introduce legislation that will allow the ombudsman to name banks and insurance companies in relation to malpractice in the Irish market.

Mr Noonan wrote: “I intend to bring forward an amendment at committee to provide the Financial Services Ombudsman with the power to name, in certain circumstances and subject to certain conditions, financial service providers about whom the FSO has upheld complaints.”

The bill will go to committee stage on Apr 24.

The ombudsman, Bill Prasifka, said this was an important power for his office to have.

“What we want to do is, in a factual and credible way, give the complaint record of each financial institution in a very straight forward way. How many complaints were made, how many upheld. We feel that this would be a very important power to have influence on how financial institutions behave,” he said.

Mr McGrath said consumers needed access to accurate information about which banks and insurance companies were trustworthy.

“We need to ensure that the public has access to accurate information about how financial service providers are treating customers and how they behave when their shortcomings are pointed out. It is vital that public confidence in the Irish financial system be restored. It is my view that greater transparency about the performance and behaviour of individual institutions is a basic pre-requisite to achieve this.”

Despite welcoming the move from Mr Noonan, Mr McGrath said he was worried that there had been no timeframe given for when the legislation would be passed into law.

Mr Noonan has chosen to include the provision as an amendment to the Supervision and Enforcement Bill 2011.

“That bill has been gathering dust for the last year and a half. This is a fairly straight forward matter that could be easily dealt with. Unfortunately the minister has chosen to attach it to this bill,” said Mr McGrath.

The Cork TD said that the manner in which the bill is implemented and that clarity in the naming and shaming will be crucial to its success.

“I am concerned that the information could come in such an opaque form that it wouldn’t be of any practical use to consumers.

“The information should be in aggregate form so that people get a good hand on which financial institutions they should be with.”

Despite the impending power to name and shame, the FSO is still hamstrung by certain provisions. In particular the six-year rule which prohibits consumers for seeking a review of a product six years after it has been sold.

“I believe the six-year rule needs to be amended. A sensible suggestion would be to change it to six years from when customers become aware of a problem,” said Mr McGrath.