Friday 20 October 2017

Wanted: tough ombudsman to put manners on the banks

HIGH NOON: Bill Prasifka's term is coming to an end. Photo: Mark Condren
HIGH NOON: Bill Prasifka's term is coming to an end. Photo: Mark Condren
Charlie Weston

Charlie Weston

The imminent appointment of a new financial services ombudsman means that now would be a good time to review the operation of that office.

Bill Prasifka's term in office is coming to an end and a replacement is being sought.

The ombudsman's office is being merged with that of the pension ombudsman, which means the new position will be called the financial services and pensions ombudsman.

The appointment is for five years. It carries a salary of €143,640, with 30 days' holiday.

The new position will be an even more powerful and important one.

The ombudsman investigates and decides on disputes between consumers and financial providers.

A former chairman of the Competition Authority, Mr Prasifka has been ombudsman since 2010.

He has been heavily criticised by the Oireachtas Finance Committee and legal rights group Free Legal Advice Centres (FLAC), as his office finds against consumers in seven out of 10 cases that are determined by it.

The Finance Committee issued a report last summer calling on the ombudsman to use his existing powers to "the maximum extent".

"The committee recommends that the Financial Services Ombudsman utilises the office's existing powers enshrined in legislation, to the maximum extent, to ensure optimal outcomes for homeowners," the committee recommended in its final report.

Just in case it was missed, the phrase "to the maximum extent" was underlined in the report. That was hardly a ringing endorsement, and speaks volumes about how our politicians see the operation of the ombudsman's office.

Given the chronic financial penalties imposed on households by the near collapse of the financial system, and the socialising of its losses, it is extraordinary that the ombudsman has not been a more pivotal figure in the area of consumers asserting their rights.

Our banks have been rescued and responded by whacking up charges and pumping up variable interest rates, as well as saddling consumers with massive losses in other areas.

One of the big criticisms of Mr Prasifka's time in the role is that his office has operated in too legalistic a way.

Mr Prasifka has responded by saying that he is constrained by law and that he has used his powers as fully as possible.

He said in a recent review that his office noted an "improvement in the work of financial service providers".

He maintains that the office has tightened procedures in relation to accepting complaints.

To be fair, his office is now naming and shaming errant financial providers. This has the potential to improve firms.

Still, we could with do an ombudsman office system that is tougher on banks and insurance firms.

Twitter: @CWeston_Indo

Sunday Indo Business

Also in Business