In 2014, 4,477 new complaints were received by the Financial Services Ombudsman (FSO). These complaints related to banks, insurers and investment institutions. If you or your organisation provide financial services then you may be subject to an FSO complaint. You should therefore familiarise yourself with the powers of the FSO, the process followed in relation to complaints, and the appeal options in the event of an adverse finding.
WHAT COMPLAINTS CAN THE FSO HEAR?
The FSO can hear complaints relating to any financial services providers (FSP) regulated by the Central Bank of Ireland, including banks, insurance providers, credit unions and mortgage and other credit intermediaries.
There is no exhaustive list or category of disputes which fall within the remit of the FSO. The FSO has sole responsibility for determining whether or not a particular complaint is within its remit. However, it cannot hear complaints which are the subject of legal proceedings before a court.
WHO CAN REFER A COMPLAINT?
An "eligible consumer" can refer a complaint to the FSO.
"Consumers" are defined as natural persons not acting in the course of their business, or groups/bodies with an annual turnover of less than €3 million (which may include clubs, charities, partnerships and other incorporated bodies).
"Eligible consumers" are (i) customers of the FSP in question, (ii) consumers to whom that FSP has offered some financial service, or (iii) consumers who have sought the provision of some financial service from that FSP.
WHAT IS THE TIME LIMIT WITHIN WHICH A COMPLAINT MUST BE BROUGHT?
A complaint must be brought within 6 years of the date of the conduct complained of.
WHAT MUST A CONSUMER DO BEFORE SUBMITTING A COMPLAINT?
Before referring a complaint to the FSO, a consumer must give the FSP an opportunity to resolve the complaint internally. The FSP has 40 business days from the date it is notified of the complaint to investigate it and attempt to reach a resolution. If it cannot do so, it must inform the consumer of their right to complain to the FSO.
DOES THE FSO HAVE TO HEAR EVERY COMPLAINT REFERRED TO IT?
The FSO may refuse to investigate a complaint on a number of grounds, including where the complaint is frivolous, vexatious or not made in good faith (in the opinion of the FSO), or where there is or was "an alternative and satisfactory means of redress" available to the consumer (e.g. litigation).
The FSO has the power to make enquiries and request further information from a complainant before deciding whether to investigate the complaint.
IF THE FSO DECIDES TO INVESTIGATE THE COMPLAINT, WHAT ARE THE NEXT STEPS?
If the complaint is accepted, the FSO will refer it to mediation, subject to the parties' agreement. The mediator is a neutral party and does not make any recommendations. If a settlement is reached during mediation, a formal mediation agreement is drafted. The contents of this agreement are not made public. Once signed, that agreement becomes legally binding on both parties. If mediation is unsuccessful, or if the parties do not agree to mediation, the complaint will then go to investigation.
The investigator drafts a summary of the complaint and sends a list of questions to the FSP. The FSP has 20 working days to submit a response. The FSP's response is sent to the complainant, who has 10 working days to respond. The exchange of documents continues until both parties have nothing further to add. In certain circumstances the FSO may require an oral hearing where sworn evidence will be required.
WHAT ARE THE POSSIBLE OUTCOMES OF AN FSO INVESTIGATION?
The complaint may be upheld, partly upheld or not upheld.
WHAT IS THE STATUS OF AN FSO FINDING?
An FSO finding is legally binding on both parties (subject to any right to appeal). The issuing of a finding concludes the dispute, ending the complaints process.
WHAT IS THE MAXIMUM AMOUNT THE FSO CAN AWARD?
The FSO can award compensation of up to €260,000 where the complaint is in respect of an annuity and €250,000 in respect of all other complaints.
IS THERE A RIGHT OF APPEAL?
Either party may appeal the finding of the FSO to the High Court within 21 days of its issue. The High Court decision can be appealed to the Court of Appeal on a point of law only.
Decisions of the FSO are often appealed. However, the High Court is mindful of the fact that the FSO possesses a degree of expertise and specialist knowledge in relation to financial matters, and is slow to overturn decisions of the FSO on such matters. It will only do so where the FSO's decision was vitiated by a serious and significant error or a series of such errors.
Such deference will not be shown to decisions of the FSO on pure questions of law. For more information on this, please refer to our briefing: FSO appeals: approach of the courts.
HOW LONG DOES THE PROCESS TAKE?
Estimated timelines are:
- Assignment of complaint to investigator: 6-8 weeks;
- Investigative process: 35-45 working days.
Extensions of time will generally be granted if requested.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.