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
regulated FSPs
of
complaints
against
• 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
Total Complaints Received
8000
?
7000
6000
5000
4000
3000
2000
1000
0
2006
2007
2008
2009
2010
2011
2012 ?
NSF
Overall Complaints, Up H1 2012
3800
New Complaints
3700
3600
3500
3400
3300
3200
3100
3000
1st & 2nd Qtr 3rd & 4th Qtr 1st & 2nd Qtr 3rd & 4th Qtr 1st & 2nd Qtr
2010
2010
2011
2011
2012
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
Numbers
Consistency
in
Complaint
• 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
Outside Jurisdiction
Settled
Referred elsewhere
120
60
40
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
• Maladministration
• Repayment Terms
5
10
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’
complain
awareness
and
willingness
to
• 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
consumer to the FSO?
before
referring
NSF
Thank you
NSF