Monday 22 October 2018

Not An Average Joe

Newsmaker Joe Meade, Financial Services Ombudsman

Davy Stockbrokers' decision to settle with the Irish League of Credit Unions for €35m represents a stunning victory for Financial Services Ombudsman Joe Meade.

In his three years in the job, the straight-talking Clareman has claimed a number of major scalps and put most of the country's other regulatory bodies to shame.

In recent years, the Government has established a plethora of statutory regulators and oversight bodies. The ESB and Bord Gais must answer to the Energy Regulator; the banks and building societies come under the supervision of the Financial Regulator; Eircom and its competitors are regulated by Comreg; while consumers rights are championed by the National Consumer Agency.

The Financial Services Ombudsman grew out of the 1999 McDowell report, which recommended that the existing voluntary ombudsmen for the banking and insurance sectors be replaced by a single statutory ombudsman whose remit covered the entire financial services industry.

While it took six years for the McDowell recommendations to be implemented, Financial Ombudsman Joe Meade has been busy making up for lost time ever since.


Meade is a career public servant who joined the Comptroller & Auditor General's Office straight out of school in 1967. He put himself through university by night and graduated with a BComm degree from UCD in 1974. Over the following quarter of a century, he gradually worked his way up through the ranks of the C&AG's office eventually becoming secretary-general.

He first came to wider notice in 1987 when he drew attention to irregular practices at beef export plants in that year's C&AG's report.

Former Labour Party minister and TD Barry Desmond stated that if Meade's warnings had been heeded there would never have been a need for the later Beef Tribunal.

Meade also worked with the late Jim Mitchell in drawing up the legislation that allowed the Dail Public Accounts Committee to investigate the operation of bogus non-resident accounts by the banks -- the so-called DIRT enquiry.

Meade left the C&AG's office after 33 years when he became Data Protection Commissioner in 2000. He quickly earned a reputation as a no-nonsense operator in his new role.

However, it was only when he was appointed as the first Financial Services Ombudsman that Meade became more widely known to the general public. The ombudsman adjudicates on complaints against financial institutions by their customers, both individuals and companies with a turnover of up to €3m.

In an era where the notion of public service is no longer fashionable, Meade shows just how influential a capable and committed public servant can be.

During his three years as ombudsman, his office has processed 13,000 complaints against financial institutions. He adjudicated in favour of the consumer in about 60pc of these complaints and in favour of the financial institutions about 40pc of the time.

One of his pet hates is the mis-selling of financial products to the elderly. In the review of complaints received by his office, which he publishes every six months, Meade outlined a series of financial horror stories.


These included the case of an 86-year old man being sold two investment bonds worth a combined €850,000. One of the bonds ran for four years, the other for six. When the man died seven months later his executors were unable to administer the estate.

While most of the statutory regulators and oversight bodies established by the government in recent years seem to be terrified of offending the organisations which they are supposed to be regulating, Meade displays no such qualms.

Over the past three years, he has locked horns with several of the country's largest financial institutions, emerging victorious more often than not.

Last year, the Irish Nationwide Building Society agreed to repay up to €6m in penalty interest it had imposed on commercial borrowers who had redeemed their loans early after Meade ruled that the charges were illegal.

The ombudsman's decision that Quinn Direct refund a €25 administration it imposed on all motor insurance customers who changed their cars was over-ruled by the High Court, which stated that Meade could only order repayments where customers actually complained.

However, this was a pyrrhic victory for the insurer as it was forced to scrap the offending charge.

Ulster Bank has also appealed one of Meade's decisions to the courts. Meade ordered it to refund a total of €7.4m to 500 customers who had invested in an international share portfolio which it managed.

The case originally went to the High Court and is now being appealed to the Supreme Court after Ulster Bank was refused permission by the High Court to introduce new evidence which it hadn't made available to Meade during his initial investigation.

However, it is Davy Stockbrokers' decision to settle with the Irish League of Credit Unions for up to €35m which represents Meade's greatest triumph.

The affair had its origins in the sale by Davy of €180m worth of perpetual (ie, non-repayable) bonds to 149 credit unions. That was before the credit crunch, which saw the bonds lose up to 40pc of their value.

Then, to make matters even worse, many of the banks who issued these bonds slashed the interest rate which they paid to the bond owners.

Enfield Credit Union complained to Meade who ordered Davy to repay it the €500,000 it had invested in these bonds. Davy is seeking a judicial review of Meade's decision in the commercial division of the High Court. It is also challenging the constitutionality of his actions. The case is due to be heard on July 8.

However, this week's settlement between Davy and the credit unions who bought the bonds, under which the stockbroker will spend up to €35m underwriting losses on the bonds it sold, means the outcome of the legal case is now largely academic.

By agreeing to bail out the credit unions, Davy has conceded the essence of Meade's case in fact if not in law.

Meade's success on the perpetual bond issue raises serious questions about the Financial Regulator, which is supposed to regulate credit unions?

What was the Financial Regulator doing while its charges were investing in such high-risk products? Would there have been any need for Meade to become involved if the Financial Regulator had been doing its job properly?

Meade is unlikely to be perturbed by this week's controversy.

Described by those who know him as tough but fair, he climbs the hill of Howth with a group of friends most weekends.

He also likes to return to his native West Clare, where he owns a farm, every five or six weeks.

Customers who have benefited greatly from his determination to do his job without fear or favour will not begrudge him the occasional well-deserved break.

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