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September 1, 2013

Under the Central Bank (Supervision and Enforcement) Act, the Financial Services Ombudsman (FSO) has been given new powers to identify banks, insurance companies and investment companies that have at least three complaints upheld against them.

This is a new and significant involvement in that up to now the Ombudsman was not able to publicly identify the offending organisation in the six monthly reports published by the FSO’s Office. The provision will apply to the first report issued in 2014.

In fairness to the FSO they have been campaigning to name and shame for some time and the new law comes into force as of September 1st 2013 which dictates that if three complaints are upheld or indeed partially upheld the Ombudsman will be able to name the financial institution involved.

4,676 complaints were made to the FSO during the first half of 2013 which represents an increase of 27% from the same time the previous year. A fifth of these were settled between the financial institution and the consumer without the need for “full adjudication”. Of these 50% of complaints related to insurance companies.

I contacted the Ombudsman’s Office to clarify whether in the event that three complaints are upheld, are all three published. Their Representative confirmed that all three would be published and the identity of the Insurer/provider noted. Furthermore any complaints relating to that insurance company/provider would be published thereafter but it is yet to be decided whether this will be on a six monthly or annualised basis. In other words whether the slate is wiped clean after six months or a year. The first report to be issued circa Jan/February 2014 will cover a four month period only (September 2013 to December 2013).

It is my own personal view that heretofore some insurance companies have referred cases to the FSO all too easily. Indeed reference to the FSO’s Office appears almost as a “standard” wording on letters of declinature issued by certain insurance companies and their loss adjusters. Clearly this habit will need to be reviewed in the context of the “three strike” rule. It is also my view that issues of a technical or complex policy liability nature should not be referred to the FSO.

You will note the FSO will deal with complaints from personal lines customers and limited companies with turnovers of less than €3million together with sole traders, charities, clubs and partnerships.

Alan FitzGerald, FCII., FCILA., FUEDI-ELAE

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