Financial Services and Pensions Ombudsman

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Financial Services and Pensions Ombudsman

Published 9 April 2019

Practitioners will be aware that the Financial Services and Pensions Ombudsman Act 2017 provided for the amalgamation of the offices of the Financial Services Ombudsman and Pensions Ombudsman. The FSPO has recently made available on its website, a database of decisions relating to financial complaints. A digest of decisions has also been published, which offers a guide to the legally binding decisions now available as well as a summary of selected decisions.

It is worth noting that: 

  • The FSPO issued 234 legally binding decisions in 2018.

  • Decisions relating to financial service providers are published in full but anonymised to protect identities. Case studies are provided for decisions relating to pension providers.

  • It is extremely positive to note that a significant number of complaints were resolved by way of mediation. 

A detailed analysis of all complaints dealt with by the FSPO will be provided by the Ombudsman in his Annual Review of 2018, is due to be published in the coming weeks.

 By way of reminder:

Definition of “long term financial service”

The definition of a "long-term financial service" was amended by the Markets in Financial Instruments Act 2018. The definition originally provided that a “long term financial service” is defined as a financial service the duration of which is 5 years and 1 month or more, or life assurance policies.

The Markets in Financial Instruments Act 2018 amended the definition such that it now includes the following provision:

Notwithstanding the fact that the financial service does not fix its duration to be of a term such as is referred to in paragraph (a) of the definition of ‘long-term financial service’ in subsection (1), a financial

service shall be regarded as falling within that definition if it would be reasonable for a consumer to expect its duration to be of at least the length referred to in that paragraph and that reasonable expectation arises by reason of—

(a) the manner in which the financial service operates to provide a financial benefit to the consumer,

(b) the type of assets with which its operation is connected, or

(c) representations made by the financial service provider, as distinct from where such an expectation arises in the case of—

(i) a current account with a financial institution, or

(ii) any other financial service of an indefinite duration that is widely available and does not possess specialised characteristics.”.

The significance of this amendment is that is effectively increases the potential for a financial service to fall within the definition of “long-term financial service”.

 
Time Limits for complaints against financial service providers

The time limits within which complaints must be made to the FSPO are set out in s. 51 of the 2017 Act.  In general, a complaint must be made within six years of the date of conduct giving rise to the complaint. 

In relation to a "long term financial service" or a pension, however, an alternative time limit exists, which is three years from the date on which the person making the complaint became aware, or ought reasonably to have become aware, of the conduct giving rise to the complaint.  The application of the three year "knowledge" time limit is restricted to conduct that occurred during or after 2002.  In relation to a pension, its application is restricted to conduct that occurred on or after 13 April 1996.   

Determining the date upon which a complainant ought reasonably to have become aware of conduct is less than straightforward, particularly in circumstances in which there has been ongoing correspondence between the provider and complainant.  Even if it is established that the complainant was not aware of the conduct (or its implications) when the conduct occurred, a provider may submit that the complainant ought to have become aware of the conduct upon receipt of specific correspondence at a later date, and the complainant may submit that the correspondence in question ought not be deemed to have generated such awareness. 

Discretion

It is worth noting that in relation to a "long term financial service" or pension, the Ombudsman has a discretion to extend the time limit where it appears that there are "reasonable grounds for requiring a longer period" and that it would be "just and equitable in all the circumstances" to extend the period.  It is unclear what "reasonable grounds" would require an extension of time in this manner or, even if it is established that such grounds do exist, what circumstances would make it unjust or inequitable to extend time in this manner. 

The practice of the FSPO is to invite submissions from both complainants and providers when it is considering either the alternative "knowledge" time limit or the discretion to extend time.

One final point in relation to time limits is that by virtue of s. 44(1)(c) of the 2017 Act, a complainant whose complaint had previously been refused as being outside the jurisdictional time limits that applied prior to the establishment of the FSPO, is entitled to re-submit his or her complaint and have it re-considered in light of the time limits that were introduced under the 2017 Act.    

Powers 

The Ombudsman has the power to direct a provider to pay compensation of up to €500,000 to a complainant or €52,000 per annum, where the subject of a complaint is an annuity.  He can also direct that a provider rectify the conduct that is the subject of the complaint. There is no limit to the value of rectification he can direct.

The financial service or pension provider must implement any direction given by the Ombudsman in his legally binding decision.

Authors

Julie-Anne Binchy

Julie-Anne Binchy

Dublin

+353 (0) 123 19636