FSO STUDY by liaoqinmei


									                       Non-legislative conflict resolution

                                                                                 Learning outcomes
                                                                                 • The role of the Financial Services
                                                                                 • Consumer complaints – non-legislative
                                                                                 • How to make a complaint to the
                                                                                   Financial Services Ombudsman
                                                                                 • Mini-case studies – the Financial
                                                                                   Services Ombudsman in action.

What is an Ombudsman?                                            The establishment of the
                                                                 Financial Services Ombudsman
The Ombudsman is an independent person who, after a fair,
thorough review of a complaint, decides if it is justified and   The Financial Services Ombudsman Bureau was established
if it is makes recommendations to resolve the problem.           under the Central Bank and Financial Services Authority
                                                                 Ireland Act 2004 and began operating in April 2005.
If you think that you have been unfairly treated by a public
body such as a Government Department or Office, a local          This Ombudsman deals with complaints against Financial
authority, the Health Service Executive or An Post and you       Service Providers. This includes:
have tried to resolve the matter yourself then the               • Banks
Ombudsman can look into the complaint on your behalf.            • Building Societies
                                                                 • Insurance Companies
An Ombudsman is impartial and provides a free service.           • Credit Unions
There are a number of ombudsmen in Ireland, and they look        • Mortgage, Insurance and other credit intermediaries
into different kinds of complaints.                              • Stockbrokers
                                                                 • Pawnbrokers
                                                                 • Money Lenders
  Who can help consumers?
                                                                 • Bureaux de Change
  • Small Claims Court
                                                                 • Hire Purchase providers
  • Arbitration/Mediation services
                                                                 • Health insurance companies.
  • Ombudsmen
  • Regulators e.g. Financial Regulator                          The Central Bank and Financial Services Authority of Ireland
  • Trade Associations or Professional bodies e.g.               Act 2004 further improves consumer protection. Along with
    Law Society, ASAI                                            the Sales of Goods and Supply of Services Act (1980)
  • Commissions and Commissioners e.g.                           and the Consumer Information Act (1978) consumer’s
    Data Protection Commissioner.                                rights with regard to goods and services, in particular
                                                                 financial services, are stronger than previously.

                                                                                                    Business 2000
                                                                                                     TWELFTH edition
The role of the Financial                                           Making a complaint
Services Ombudsman
                                                                    Your bank, insurance or finance company will not want
                                                                    unhappy customers. It's important that businesses providing
The   Financial   Services   Ombudsman        can   investigate
                                                                    financial services hear any concerns that consumers have – and
complaints from individual customers and small businesses
                                                                    put things right when needed. If consumers of financial services
(SMEs) who have unresolved disputes with financial service
                                                                    are not happy with how the business deals with their complaint
providers who are either regulated by the Financial Regulator
                                                                    then they can contact the Financial Services Ombudsman.
or are subject to the terms of the Consumer Credit Act 1995.

                                                                    A consumer may make a complaint to the Financial Services
The Financial Services Ombudsman acts in an independent
                                                                    Ombudsman where they feel they have not got satisfaction
and impartial manner and whether a complaint can be
upheld or not is determined on the basis of evidence.
                                                                    • The provision of a financial service by a financial service
The Financial Services Ombudsman is an alternative method
                                                                    • An offer by the provider to provide such a service
of dispute resolution. Other such methods of resolving              • Failure by the provider to provide a particular financial
disputes include negotiating a solution, conciliation,                service that has been requested.
arbitration and collective bargaining.
                                                                    Here are some examples of the types of consumer complaints
Consumer complaints                                                 the Financial Services Ombudsman would investigate:
                                                                    • A lender’s letter outlining the details of a loan is unclear
Consumers will, and are, entitled to complain. Financial Service      and doesn’t explain the figures as well as it might do
Providers will, and do, make mistakes. Against that background,     • A customer misunderstands calculation of interest payments
matters that have not been resolved between their customers           on a loan
and Financial Service Providers are referred to the Ombudsman.      • The repudiation of a claim made under an insurance policy
                                                                    • The management and administration of investment products.
The Financial Services Ombudsman’s role is to be an
independent arbitrator dealing with individual complaints           Who can complain to the Financial Services
against financial services providers. Complaints must first be      Ombudsman’s Bureau?
made to the financial institution concerned and then to the
Financial Services Ombudsman if a consumer is still dissatisfied.   • All personal customers
The Financial Services Ombudsman will then consider the matter      • SMEs (i.e. Small limited companies with a turnover of
and whether he/she may investigate same. The Financial Services       €3,000,000 or less)
Ombudsman has the power to order financial institutions to          • Unincorporated bodies, charities, clubs, partnerships, trusts
rectify the conduct complained of and to pay compensation.            etc.

Every six months the Financial Services Ombudsman publishes         What complaints cannot be made?
selected case studies to highlight what type of cases are dealt
with and what lessons can be learned. To date, over 100 case        A consumer is not entitled to make a complaint if the matter
                                                                    complained of:
studies have been published to increase consumer awareness of
                                                                    • Is or has been the subject of legal proceedings before a
the Financial Services Ombudsman and its services to the public.
                                                                      court or tribunal
                                                                    • Occurred more than 6 years before the complaint is made
                                                                    • Is within the jurisdiction of the Pensions Ombudsman.


                                                                    If a complainant engages solicitors or any other professional
                                                                    assistance to handle their application, any costs incurred legal
                                                                    or otherwise, are entirely their responsibility.

                                                                    Complaint procedures – steps to follow

                                                                    If you have a complaint about a financial service provider you
                                                                    are advised to take the following steps:
                                                                    • Request a Complaint Form from the Financial Services
                                                                       Ombudsman’s Bureau or download one from its website.

Financial Services Ombudsman
Non-legislative conflict resolution

                                                                 A finding by the Financial Services Ombudsman is binding on
                                                                 both the person who makes the complaint and the Financial
                                                                 Service Provider, subject to an appeal to the High Court.

                                                                 Investigation and enforcement of
                                                                 Financial Services Ombudsman

                                                                 More than 14,000 complaints have been received since the
                                                                 office opened in April 2005. By July 2008 some 2,700 complaints
                                                                 have been received, 30% up on 2007. 60% of these complaints
• The Complaint Form will be examined by the Financial           were resolved to the satisfaction of the consumer, either
  Services Ombudsman and if the complaint is within his/her      because of an amicable mediated settlement or through a
  remit, the Complainant will be asked to write to a             legally binding ruling in the consumer's favour.
  nominated member of senior management in the Financial
  Service Provider against which the complaint is made. The      Although each party has a statutory right to do so, there have
  Financial Service Provider must issue a ‘Final Response’       been very few appeals to the High Court against Decisions made
  letter which outlines the Provider’s position in relation to   by the Ombudsman, 18 in all, representing only 0.2% of rulings.
  the matter in dispute.
• When the Ombudsman has received the Complaint Form             The Ombudsman can award compensation of up to €250,000
  and the Final Response, the option of mediation will be        where a complaint is upheld. Decisions by the Ombudsman
  offered to both parties as a means of resolving the matter.    are binding on both parties subject only to an appeal by
  If mediation is not availed of or is unsuccessful then a       either the complainant or the financial service provider to the
  formal investigation of the complaint by the Ombudsman         High Court.
  will begin.
• When investigating the complaint, the Financial Service        The following mini case studies demonstrate how the
  Provider will be asked a series of questions by the            Ombudsman goes about resolving conflicts.
  Ombudsman and asked to submit documentation. These
  responses and documents will be copied to the
  Complainant. Any observations from the Complainant will
                                                                   Mini Case Study 1
  be copied to the Provider.
                                                                   Cancelled cheque
• All the circumstances surrounding the complaint will then
  be   examined.    After    examining   the   evidence   the      A customer of a Bank issued a cheque for €4,100 and
  Ombudsman will consider whether an oral hearing is               then tried to have the cheque stopped. The cheque was
  necessary. If an oral hearing is held then the oral evidence     paid however. The customer claimed that the Bank was
  given under oath at that hearing will be reviewed together       negligent in allowing the cheque to be cashed despite
  with the documentary evidence and a Finding will be              his order to stop it. He claimed that a Bank official had
  issued to both parties.                                          said “that cheque is now cancelled”.
• The Finding of the Financial Services Ombudsman is legally
  binding on both parties, subject only to appeal by either        The Ombudsman’s investigations revealed that the
  party to the High Court.                                         Complainant had telephoned the Bank at 11:23 a.m. on
                                                                   7 March and requested that a stop be placed on the
What redress can the Financial Services                            cheque which he had issued on 6 March. But the
Ombudsman order?                                                   cheque was cashed at 10:29 a.m. on 7 March at the
                                                                   Complainant’s branch, so that when the Complainant
The Financial Services Ombudsman can direct the financial          telephoned a stop order at 11:23 a.m. on 7 March, it
service provider to do one or more of the following:               was already too late.
• Rectify or change the conduct complained of or its
                                                                   The Ombudsman found that the onus was entirely on the
                                                                   Complainant to give the stop order before the cheque
• Provide reasons or explanation for that conduct
                                                                   was cashed and he had not done this. The Ombudsman
• Change that practice
                                                                   found that there had been no failure or negligence on
• Pay compensation up to a maximum of €250,000 or
                                                                   the part of the Bank and the complaint was not upheld.
  €26,000 annuity
• Take any other lawful action.

www.business2000.ie                                                                                   Business 2000
                                                                                                       TWELFTH edition
   Mini Case Study 2
   Insurance agent drove a customer to an ATM cash point
   to secure sale of policy-action. This was condemned by
   Ombudsman. €1,520 premiums returned as well as
   €1,500 compensation

                                                                                                                             While every effort has been made to ensure the accuracy of information contained in this case study, no liability shall attach to either The Irish Times Ltd. or Woodgrange Technologies Ltd. for any errors or omissions in this case study.
   The complaint was that an elderly man was given false
   information,    purchased    health/illness   protection
   policies and paid for them on the spot, because he was
   forcibly led to believe that if he did not do so, his
   existing medical insurance cover with a third party
   health insurer would be insufficient for his needs. He
   realised a short time later, that he was misled. He
   applied to the Company to cancel the policies and
   received a full refund of the premium amounts paid,

   After the Ombudsman commenced the investigation a
   more specific complaint was subsequently made. One of
   the Company's representatives had driven him over 12
                                                                  Arbitrator: Someone chosen to judge and decide a
   miles to the nearest ATM cash point in order to procure
                                                                  disputed issue.
   the necessary cash to pay the balance; this was done           Collective Bargaining: Negotiation between groups
   under duress while the other representative stayed             of workers (usually but not always involving trade
   behind in the house until his return.                          unions) and their employer or employers to determine
                                                                  wages, hours, rules, and working conditions.
   The Ombudsman found that the agents of the                     Complainant: A person, group, or company that
   Company acted in a highly improper manner. He noted            makes a complaint, as in a legal action.
   that the Complainant was not out-of-pocket, given the          SMEs: Small to medium enterprises.
   refund of premiums already received, but he directed
   the Company to pay an award of €1,500 to the
   Complainant also for the distress caused. The
   Ombudsman has brought this disgraceful sales practice
                                                                  Student activity
   to the attention of the Financial Regulator also.

                                                                  Complaints Procedure – Divide students into pairs.
                                                                  One will play the part of the Ombudsman and the
Conclusion                                                        other a complainant. The complainant will outline their
                                                                  particular complaint and the Financial Services
The Financial Services Ombudsman is a statutory impartial         Ombudsman will offer advice based on the complaints
and independent officer whose actions play a vital role in        procedure outlined in the above case study. Students
the overall regulatory environment for financial services. All    will write up the dialogue in advance of the acting out.
the regulation in the world is of little use to the individual
consumer if he/she cannot have access to a system of redress      Role of the Ombudsman – Divide students into pairs.
so as to ventilate the alleged wrong done and have it             One student will play the part of a journalist
remedied.                                                         interviewing the other student who plays the part of
                                                                  the Ombudsman. The journalist will ask questions
The Government's continuing emphasis on having a well             about   the   role   of   the   Ombudsman      and   his
regulated - but not over regulated - financial services sector,   effectiveness. Students will write up the dialogue in
increased awareness by consumers, and clearer focus by the        advance of the acting out.
industry on treating the customer fairly combined with the
office of the Ombudsman cannot but enhance further the            Afterward both students will write an article for a
financial services environment overall for everybody in           national newspaper on the interview they just had.


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