Flac, the Free Legal Aid Centres, says neither the Government, the Central Bank nor the Financial Services Ombudsman do enough to protect financial services consumers or to provide redress when something goes wrong.
It criticises the Government for failing to place the Consumer Protection Code on a statutory footing and for persisting in excluding hire purchase agreements and credit unions from its remit.
It also criticises the lack of Dáil scrutiny of the Code of Conduct on Mortgage Arrears, noting: “These tasks are currently undertaken solely by an unelected body in the form of the Central Bank, the same body which manifestly failed to act with the necessary urgency during the evolution of the mortgage crisis.”
On the Central Bank specifically it claims it has a “soft touch” approach to compliance checks on financial institutions, and states: “The ready access to the Central Bank that financial service providers appear to enjoy is in sharp contrast to the limited lobby on behalf of financial service consumers.”
In relation to changes to the Code of Conduct on Mortgage Arrears, it says the Central Bank “clearly bowed to pressure from lenders” in loosening restrictions meant to prevent stressed customers being continually harassed by calls, letters and visits.
The highly critical 200-page report also takes the Financial Services Ombudsman to task for failing to recognise that consumers are automatically disadvantaged because they lacked the resources and legal advice that financial institutions enjoyed.
It questions why the FSO does not follow up the one in three complaints that are abandoned and does not assess the terms under which many others are settled before the FSO investigation concludes.
“When one considers that many consumers will have made their complaint alone and with no access to professional advice or assistance, this lack of curiosity is of concern.”
The average compensation for the small number of complainants whose complaint is upheld fell from more than €3,000 in 2010 to €1,100 last year, which Flac says may not be adequate to deter poor behaviour by a financial service provider.
Overall, Flac said of consumer protections: “A disgruntled financial services consumer, and particularly a credit consumer, is not facilitated and empowered by the system so much as discouraged and befuddled by it.”
Report co-author, Paul Joyce, stressed: “We are not against lending. Lending is an important part of any economy. Acquiring goods and services with borrowings generates economic activity. What we are saving is that consumer credit needs to be responsible and properly regulated.”
Jacqui McCrum, deputy financial services ombudsman, who attended the launch of the report yesterday said: “We will review it and consider all the feedback raised. We co-operated with the research for the report and we always welcome feedback.”
Central Bank and Department of Finance representatives who also attended responded similarly.