Wednesday 21 February 2018

Financial watchdog warns his office under threat from legal challenges

Financial Services Ombudsman William Prasifka
Financial Services Ombudsman William Prasifka

Dearbhail McDonald, Legal Editor

THE Financial Services Ombudsman today warned that his office is under “serious threat” because of legal challenges, conflicting rulings by judges and a new surge in homeowners complaining about the mortgage arrears process.

Bill Prasifka, whose office received a 25pc increase in year-on-year complaints in the first six months of this year, said that if borrowers fighting to retain their homes require an oral hearing into their complaints about how banks handle mortgage arrears, his office will not be able to cope.

Mr Prasifka said that it is a “human tragedy”, five years into the crisis, that people are only now emerging from the mortgage arrears process.

Complaints by homeowners had led to a fresh surge in complaints to the FSO which currently has 29 appeals outstanding before the High Court.

“We currently have 100,000 complainants, potentially, who are in mortgage arrears and that number is growing,” said Mr Prasifka at a legal conference on oral hearings and inquiries.

The conference, hosted by La Touche, the legal training company and Dublin law firm McDowell Purcell. (KEEP organisers ref in), was chaired by High Court Judge Mr Justice Michael Moriarty.

Mr Prasifka said that some of the rulings coming down from the courts present the FSO with a direct challenge as to whether or not the office can exist.

He threw down a gauntlet to the Government to have the “intellectual honesty to abolish the financial ombudsman” if his office is required to hold oral hearings into complaints where there are disputes about material facts.

Mr Prasifka’s remarks led to heated exchanges with Senior Counsel Jim O’Callaghan who said if the ombudsman was not happy with the way the courts were interpreting the law in respect of his office, he should advocate for a change in the law.

 “Those courts are making decisions based on what is in our Constitution and based on fair procedures,” said Mr O’Callaghan who said it was not being suggested that the FSO conduct oral hearings into every case that comes before him.

“It is not as if the courts are acting without any basis and if Bill wants to change the law he should advocate for a change in the law”.

The FSO is dealing with increasing numbers of complaints about financial products and mortgages.

Between April 2009 and June 2013, the FSO received 410 complaints about tracker mortgages.

Almost a third of complaints - which peaked in 2011 and 2012 - were upheld or partially upheld.

Some 73pc of tracker mortgage complaints were rejected.

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