Bank watchdog struggling to prevent rip-offs
The ombudsman’s ability to tackle banks that rip-off customers is also being hamstrung by the inability to name and shame offending financial institutions.
Bill Prasifka’s office handled 4,676 complaints in the first six months of the year according to the bi-annual report released today.
Half of all complaints related to insurance companies with the number of queries about payment protection insurance rocketing by 150%. One-in-three complaints involved the banking sector.
However, Mr Prasifka said his office is reaching breaking point as it faces a raft of future complaints emerging from the mortgage sector.
“We have no excess capacity in our organisation if the number of complaints continue to increase, we will rapidly find ourselves underwater,” he said. “We are not there yet but we are on our way to breaking point.”
The office is expecting a wave of complaints from customers dissatisfied with the mortgage arrears resolution process (MARP), who after exhausting the banks’ internal review processes will bring their complaints to the ombudsman.
“The MARP process is only beginning and we are seeing more and more complaints from people,” said Mr Prasifka. “These are people in mortgage arrears and distressed by the situation that they find themselves in. They tend to be more complicated cases. Our own internal monitor, taken on a daily basis is that these complaints are only going up.
“In terms of the budget of the office, we need to have some increase if we are to continue to deal with complaints.”
The ombudsman’s office has been calling for the power to name and shame financial institutions since it was founded in 2005. However, the Government failed to enact legislation under the Central Bank (Supervision and Enforcement) Act 2013 earlier in the summer.
“My predecessor was calling for it. It has been on the cards as far back as when the office was established in 2005,” said Mr Prasifka.
While the Department of Finance said legislation will be passed in September, fears have emerged that this legislation is too restrictive and that it favours the banks over consumers.
Chairman of the Oireachtas finance committee Ciarán Lynch said the requirement that an institution must have three complaints upheld against it before it can be reported publicly is “overly benign and overly favourable to the financial institutions”.
“Any complaint which has been found to be valid and is upheld, should actually be in the public domain,” he said.
The Labour TD said if a bank takes action against a customer, that is in the public domain because it goes before the courts. “There should be an equal approach to any banks if a consumer finds any adverse action on their behalf,” he said.
Fianna Fáil’s finance spokesman Michael McGrath said the proposed legislation as a “dilution” of the name and shame rules. He said such information could be relevant to consumers in making financial decisions.
Mr McGrath said he was concerned that financial services providers will be able to delay the publication of complaints against them by appealing findings “for the sole purpose of preventing their business being named and shamed”.
