Financial Services Ombudsman Credit Unions Complaint Experience William Prasifka Financial Services Ombudsman 3 November 2012 National Supervisor Forum Rochestown Park Hotel Cork NSF

Introduction & Background NSF

FSO Role Independent adjudication on unresolved disputes between Complainants and Financial Service Providers thereby enhancing the financial services environment for all sectors NSF

Power of the FSO Investigate /Adjudicate complaints Award compensation up to €250k Direct Rectification Findings - legally binding, appealable only to the High Court Accessible & Free Service to the Complainant NSF

Who can complain to FSO? All personal customers Limited companies with a turnover of €3,000,000 or less Unincorporated bodies, charities, clubs, partnerships, trusts, etc. NSF

Credit Unions Consumers can complain against Credit Unions (Financial Service Providers) Credit Unions can complain as ‘consumers’ subject to assessment of jurisdiction and discretion ‘not to investigate’ by FSO NSF

Credit Unions as Complainants Jurisdiction: turnover of €3m equates with CU income Discretion of FSO not to investigate: availability of ‘alternative and satisfactory means of redress’ NSF

Role of the FSO Fair adjudicator of complaints against regulated FSPs Not a consumer advocate Not an industry advocate Free Service – can engage professional advocates at your own expense NSF

Standard of Adjudication 2004 Act “The FSO... is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without regard to technicality or legal form.” FSO guided, not bound by regulatory codes & law NSF

Complaint Trends Context NSF

Complaint Trends – Context NSF

Overall Complaints, Up H NSF

Complaints Recd– By Sector NSF

Outcome of Findings (All Products) NSF

Complaints Against Credit Unions NSF

Credit Union Complaints Small number of complaints made Usually less than 1% of Complaints Relative Consistency in Complaint Numbers As of yet, no ‘spike’ in a particular complaint type NSF

Complaints against Credit Unions 2009-Sept 2012 NSF

Findings Issued in Context Since 2005 Approx 400 Complaints Made against Credit Unions 94 Complaints reached Finding stage Remainder are usually ‘closed’ because: No further Contact 120 Outside Jurisdiction 60 Settled 40 Referred elsewhere 21 NSF

Finding Outcomes since 2005 Points to Note Not many complaints received BUT Finding outcomes not in line with industry norms More complaints upheld against C.U.s NSF

Outcome of Credit Union Findings Since 2005 NSF

Finding Outcomes Across All Sectors NSF

Complaint Types 2012 Customer Care 5 Maladministration 10 Repayment Terms 7 PPI = Emerging Issue? Approx 15 PPI mis-selling complaints against Credit Unions so far in 2012 NSF

Complaint Process NSF

Complaints Procedure Overview 1.Lodging a Complaint 2.Initial Assessment 3.Final Response Letter 4.Mediation 5.Investigation 6.Oral Hearing 7.Adjudication & Finding NSF

Can Uphold Complaint if the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;... although the conduct... was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;...if conduct was otherwise improper; NSF

What is expected of CU when handling complaint Engage with the customer Understand what the Complaint is Detailed ‘Final Response’ letter Ask yourself: Has the CU been reasonable? Are there grounds for settling or resolving matters before referral to FSO? NSF

FSO Experience with Judicial System NSF

High Court Appeals FSO Findings – Appealable to High Court Both FSP and Consumer entitled to appeal Currently – Approx 40 HC Appeals (1%) NSF

Courts hold FSO to High Procedural Standard Substantial experience before the Courts Full exchange of submissions & opportunity of parties to respond Procedures / investigation must reflect the remedy directed Request for discovery and jurisdiction must be fully considered NSF

High Court Appeals – Standard of Review Not a ‘de novo’ review “To succeed... must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors...“ Ulster Bank Investment Funds Limited v Financial Services Ombudsman, 2006 NSF

Judicial Support for FSO “What has been established: [FSO] is an informal, expeditious and independent mechanism for the resolution of complaints... not engaged in resolving a contract law dispute in the manner in which a court would engage with the issues... can also make orders of a type that a court would not normally be able to make... possesses a type of supervisory jurisdiction not normally vested in a court.” Hayes v Financial Services Ombudsman & Ors – 2008 NSF

Judicial Support for FSO Unique Jurisdiction ‘Plain Language’ Confirmation that the purpose of the FSO is to keep the process of dealing with quantum of complaints, so far as possible, out of the court The Ombudsman is not the correct forum for a party who wants court style remedies Courts do not ‘second guess’ awards NSF

Conclusions NSF

Complaint Trends & Outcomes ‘Paradigm’ Shift Consumers’ awareness and willingness to complain Product types / complaints may change......BUT Complaints remain at record levels Increase in challenges to Findings Indications are for an increase in Complaints NSF

Points to Note FSO Consistency of approach in Findings Cases decided on individual merits ‘Fair and Reasonable’ attitude by the Institution? Has Institution engaged with Consumer? Effort to resolve matters before referring consumer to the FSO? NSF

Thank you NSF