Call to lift six-year cut-off for financial complaints

Some 371 complaints taken to the Financial Services Ombudsman were closed last year due to the six-year time limit that currently applies under law.

This amounted to 8 per cent of the 4,915 total complaints that were closed by the FSO last year. Some 3,003 complaints have been closed due to the six-year rule since 2011.

This data emerges in a written reply on the issue from the Minister for Finance Michael Noonan to Sinn Féin's finance spokesman Pearse Doherty.

Mr Doherty is seeking to have the time bar lifted, putting forward a private members’ Bill that has passed the second stage with cross-party support. He has argued that the six-year rule presents difficulties for mortgage holders who might only find out about an issue with their loan some years after the event.

“We are talking about hundreds of people each year that are being excluded from the statutory means of addressing complaints against banks and other financial institutions,” Mr Doherty told The Irish Times.

In its own draft legislation, the Government has proposed to extend the time limits for complaints for certain long-term financial services to the same time limit that applies to pension products, namely six years from the date of the conduct complained of, or three years from the date the complainant knew or ought to have known about the conduct.

Mr Noonan told the Oireachtas finance committee last month that this would improve access to the ombudsman for consumers of long-term products, who might not become aware of an issue until well after the six years had passed.

For short-term financial services, the time limit would be unchanged. The changes are part of a plan to merge the FSO with the Pensions Ombudsman.

The Minister has also retained the requirement for consumers to first try to resolve the matter with the provider’s internal dispute process, although the ombudsman can intervene if the provider is considered to be frustrating the process.

‘Wide open’

Mr Doherty said the Government’s approach could leave “too much wriggle room” for financial providers to sidestep complaints.

“For example, as drafted the Bill would limit the complaint to three years after the complainant ‘ought to have become aware’ of an issue. That sort of wording is too wide open to interpretation in my view,” he said.

“With the tracker mortgage investigations ongoing, this issue is all the more critical. Hundreds, if not thousands, of home owners may choose to access the Financial Services Ombudsman to seek redress if they are not happy with the bank’s decision. As things stand, many of them would be barred from doing so.”

The Central Bank of Ireland has ordered banks in Ireland to review their tracker mortgage books to see if any customers might have been disadvantaged in how interest rates were applied to their loans. The banks will be expected to offer redress to any customers who were affected.

Permanent TSB last year admitted a "failure" in how it applied interest rates in 1,372 tracker mortgages.