Banks and other financial institutions who mishandle customers’ money will have fewer places to hide after the easing of restrictions barring complaints deemed out of time.
Several thousand customers whose complaints were already rejected for being out of date now also have a second chance at redress following the change.
Some 3,000 people who complained to the Financial Services Ombudsman since 2011 fell foul of law stating they had to make their complaint within six years of a breach — even if they were unaware at the time that their finances were mishandled.
That restriction has now been lifted in an amendment to the law. Ombudsman Ger Deering said the impact could be significant.
“It isn’t a blanket removal of the time limit so not all the 3,000 would be able to bring their complaints back to us but similarly, there may have been people who didn’t make a complaint because they were aware of the time limit so we don’t know how many this will affect but it could be quite significant,” said Mr Deering.
The ombudsman handles complaints against banks, mortgage providers, insurance companies, credit unions, and other financial services firms.
Up to last month, any complaint lodged more than six years after an alleged mishandling of a customer’s finances was ineligible.
That restriction has now been lifted in the case of long-term financial products such as life assurance, mortgages, and investments once the product did not expire more than six years ago and the breach complained of took place after 2002.
Mr Deering warned institutions would not be able to plead inability to respond to an older complaint because of their assumption that they only had to retain records for a limited period of time.
“Under the codes of conduct, they are supposed to hold records for six years after a product expires so I don’t anticipate that would be a big problem but we’ll see. If we have to deal with that, we will.”
The ombudsman has powers to order compensation payments to aggrieved customers of up to €250,000.
“Even more importantly, we can order a situation to be rectified. That can mean accepting an insurance claim that was unfairly rejected. That kind of decision can be life-changing.”
Mr Deering said he believed institutions were beginning to come round to the idea that they needed to resolve disputes with customers at an earlier stage.
Since introducing a full-time mediation service last year, the number of institutions willing to accept a customer’s offer of mediation has dramatically increased. Almost 2,500 of the 4,300 cases resolved last year were settled through mediation rather than the more formal adjudication process.
“We did a survey in 2015 which showed that 80% of people who made complaints to us had not been able to talk to anyone when they tried to raise the issue with their institution.
“All we’re asking is that institutions would listen to their own customers. The willingness to enter mediation is a step forward.”
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