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Ombudsman may be able to investigate old claims

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Ger Deering

Ger Deering

Ger Deering

Rules that bar the Financial Services Ombudsman from investigating claims about older financial policies may be relaxed.

The change could mean thousands of people who believe they were mis-sold financial products, or dealt with unfairly by financial institutions, would have the right to have their case investigated.

Current rules prevent the office of FSO from looking into complaints about financial products if the event causing the problem occurred more than six years ago.

Last week the Sunday Independent reported that more than 700 complaints about 'whole-of-life' insurance policies had been made to the FSO between 2010 and 2015 but no sanctions were ever given.

Reviewable whole-of-life policies allow insurers to regularly jack up the cost of premiums as policy holders age.

Many people sold these policies claim they were not aware of this provision.

An FSO spokesperson said its failure to award any sanctions regarding these policies was largely because they were sold more than six years ago.

"Those products were not suitable . . . they should never have been sold," former Financial Services Ombudsman Joe Meade told the Sunday Independent, comparing them to controversial endowment mortgages.

He is in favour of a relaxation of the six-year rule.

A spokeswoman from the FSO explained that the organisation is currently governed by strict time limits on the cases it can investigate.

"The time limit in respect of conduct of financial service providers which the FSO can investigate is strictly laid down by statute".

"The FSO may only investigate the conduct of financial service providers which has occurred within six years of the complaint being made to the FSO.

"If the conduct occurred outside this period the FSO has no discretion to extend the time period. If there is conduct which has occurred within the six years from the date of the complaint, the FSO may (and indeed does) investigate that conduct only but not any other conduct in relation to a product which may have occurred outside the time limit.

"So, for example, in the case of a whole-of-life policy which was sold outside the six-year time limit the sale of that policy could not be investigated but if, for example, it was alleged that incorrect amounts were deducted as payment within the previous six years, that conduct could be investigated."

But the rule may be amended as part of a forthcoming merger between the Financial Services Ombudsman and the Pensions Ombudsman, the spokeswoman added.

"Our understanding is that the Government may be considering reviewing or amending the rules in relation to time limits as they may be applicable to the amalgamated offices of the FSO and the Pensions Ombudsman.

"The Pensions Ombudsman has more freedom to look at older cases; it can examine policies sold up to three years from the date on which they person realised, or ought to have realised, there was a problem.

"It can also look at pension claims that date from 1996, if the problem complained of occurred before 2003."

However, the relaxing of time limits for the FSO may be a difficult process.

"The issues in this regard are complex involving a range of considerations including the interface with the Statute of Limitations, existing consumer protection laws, complaints mechanisms and the availability of records" Finance Minister Michael Noonan said when queried in the Dail in January.

"Trying to find out whether a product was mis-sold 20 years ago is very difficult. Changing the time limit for which claims can be investigated may not be the panacea. But it would at least help," said former Ombudsman Joe Meade.

The Financial Services Ombudsman (FSO) is the independent adjudicator tasked with investigating complaints from consumers about their dealings with financial service providers like banks and insurers.

Its decisions are legally binding and can be appealed to the High Court. It has the power to order institutions to pay consumers compensation.

Until recently it has been led by Ombudsman Bill Prasifka, who took over from Meade. The role will shortly be taken over by former taxi regulator Ger Deering.

Sunday Indo Business