BANKS, BUILDING societies, and insurance companies are failing to take their customers’ complaints seriously, at an earlier stage. That is the conclusion reached by Bill Prasifka, Financial Services Ombudsman (FSO) in his latest report, where he highlights two worrying developments.
One is the increase in the number of complaints made by the public against financial institutions – 3,633 in the first half of this year. The other is the FSO is upholding more of the complaints that consumers make. The financial industry, Mr Prasifka has concluded, is not rising to the challenge. If complaints from the public were dealt with and resolved sooner by the financial sector everyone would gain, and much time, effort and money would be saved.
It is now clear the FSO needs greater statutory powers to make it a more effective enforcer of consumer rights. At present, the FSO investigates customer complaints in private; its findings are also private. Its role is to adjudicate on complaints received, to redress wrongs and, where justified, to make compensation awards. But where complaints are upheld and banks or other financial institutions are found to be at fault, they cannot be named. That, however, is set to change.
The Oireachtas is discussing legislation that would allow the ombudsman’s office to “name and shame” offenders. This legal change would give financial service providers an incentive to take their responsibilities to consumers more seriously than they have so far done.
At present, because the offending bank or insurance company cannot be publicly identified and is known only to the complainant, it suffers no reputational damage for its actions. The public, unaware of the offender’s identity, are therefore less informed about – and less well protected against – such unacceptable behaviour.
As Mr Prasifka has pointed out: “The alleged misselling of payment protection insurance (PPI) policies has resulted in a doubling of PPI complaints in six months.” That would suggest a remarkable level of complacency by some insurance companies which, having sold these financial products to their customers were then slow to address their subsequent concerns.
Mr Prasifka has spoken softly. It is time the Oireachtas passed him the big stick that he needs, and has long sought, to become a more effective ombudsman. A law that aims to protect the consumer, but which also serves to shield the identity and bad behaviour of the offender, has little to commend it, and needs to be changed.