Central Bank and Financial Services Authority of Ireland (Amendment) Act 2017 cont.

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Central Bank and Financial Services Authority of Ireland (Amendment) Act 2017 cont.

Published 29 agosto 2017

Reaction to Gallagher v ACC

This amendment appears to be a response to the Supreme Court decision of Gallagher -v- ACC Bank Plc t/a ACC Bank [2012] IESC 35, wherein the Court noted that complaints relating to closed investments had the potential for injustice as, by the time the consumer became aware of the act or conduct complained of, the limitation period had often expired.

In that case, the Plaintiff, Mr Gallagher, invested in a bond which had been advertised and marketed by the Defendant Bank as a "borrow to invest" product. The Plaintiff invested €500,000 in the bond in 2003. Proceedings were thereafter commenced in 2010, more than six years after the investment had been made. The Plaintiff's case was that the Defendant, "wrongfully and in breach of the various duties and contractual terms…caused the Plaintiff to enter into transactions that were unsuitable for the Plaintiff and caused the Plaintiff loss and damage and the Defendant made representations referred to above negligently." The Plaintiff alleged that the product sold to him was in fact, "wholly unsuitable for the Plaintiff or indeed any investor." Essentially, the Plaintiffs case was that due to misrepresentations on the part of the Defendant he had entered into an investment which he otherwise would not have entered into.

The issue as to whether the claim was statute barred was taken as a preliminary point. The Supreme Court came to a unanimous decision that the Plaintiffs case was statute barred. Mr Justice Fennelly stated that, "it is to my mind inescapable that the Plaintiff's claim as pleaded is that he suffered damage by the very fact of entering the transaction and purchasing the Bond. The cause of action then accrued. That was also the date when he entered into a contractual relationship with the Bank. On the pleaded effects the present case as set out in paragraph 10 of this Schedule, the damage accrued on entry into the Bond when the Plaintiff was sold the Bond which was "wholly unsuitable" for him."

The Court were cognisant of the potential for injustice as a result of the limitation period however, and expressly stated, "if there is a case that the limitation period here operates too harshly then that argument should also apply in relation to the contractual claim, and public policy decision should be taken by the Oireachtas on that issue taking into account all the competing interests."

Retrospective Effect

Aside from the sweeping powers in relation to limitation that the Bill provides, it is of note also that the Bill is to have retrospective effect.

Any complaints where the conduct occurred during or after 2002, and the service to which the complaint relates has not expired/been terminated more than six years ago can avail of this new limitation period.

Therefore, parties who entered into closed investments from 2002 on may find themselves with the right to take a complaint that was previously considered to be statute barred. Given the wide scope of powers the Ombudsman has to restore parties to their previous positions, which had not been changed by the Act, it is expected that this will lead to a flurry of new complaints being made which had previously been considered statute barred.

The Financial Services and Pension Ombudsman Bill 2017

This Bill was published in May of this year. The first purpose of the Bill is to amalgamate the offices of the Financial Services Ombudsman and Pension Ombudsman into one, but the Bill also contains within it changes to the limitation period for complaints to the Ombudsman.

In its current format, this Bill defines "long-term financial services" as services where:

  1. The actual or intended duration of the service is five years and one month or more;
  2. The service is not subject to annual review
  3. The service does not include a right of unilateral cancellation by either party prior to the expiry of the actual or intended duration.

Therefore this definition is more narrowly drafted than that contained within the Central Bank and Financial Services Authority of Ireland (Amendment) Act 2017. It is therefore to be hoped that any discrepancies between the bills will be amended prior to enactment of this legislation, which was published in May of this year and has been given a priority designation, suggesting it may too shortly appear on the statute books.

Links to the Act and the Bill:




Jane Kenneally

Jane Kenneally


+353 (0) 123 19673

Key Contacts

Noreen Howard

Noreen Howard


+353 (0)1 231 9682

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