Implications for banks generally of the contradictory Ombudsman's decisions in Ulster Bank case

This thread is not about the Ulster Bank case.

Discuss the merits of the UB case in this thread: https://www.askaboutmoney.com/threa...get-redress-after-ombudsmans-decision.231620/

But I think that it raises serious issues for financial institutions and the Central Bank.

Every complaint brought to the Ombudsman is decided on its merits. If a complaint is rejected on a particular issue, it does not mean that a different employee of the Ombudsman will reject a complaint from a different customer on the same issue. They might arrive at a different conclusion and uphold the complaint. Because of this, I have encouraged people to take complaints to the Ombudsman, even if they know that the Ombudsman has rejected an identical complaint.


But the Central Bank has ruled that if the Ombudsman upholds a complaint, then the bank must roll out the decision to everyone else affected by the same case.

In the Ulster Bank case, the Ombudsman, Bill Prasifka, rejected three complaints on the issue. Later the Ombudsman, Ger Deering, upheld two complaints on the same issue. It's conceivable that the new Ombudsman, Liam Sloyan, might agree with Bill Prasifka.

But Ulster Bank is obliged to roll out the decision to thousands of customers. Or appeal it to the High Court and Supreme Court as it has done and intends to do.

In summary, the customer needs to win only once, while the bank must win every time.

Some cases are very clear cut. " I should get a tracker because my neighbour had a tracker" will be dismissed by all Ombudsmen. But many tracker cases are 50/50. I have seen complaints upheld which I thought, on balance, should not have been upheld. And l have seen cases rejected which, on balance, I think should have been upheld. No matter how intelligent and fair two people are, they will not agree on all cases.

The High Court is different. If the High Court rejects a case, it forms a precedent for further cases, so there is really little point in bringing a case to the High Court, where the same issue was rejected in another case.

It seems perfectly reasonable to me that if the High Court upholds a case, the banks should be required to roll it out to all customers affected by the same issue.

I don't know what the solution is.

Maybe the Ombudsman should designate some cases as systemic. Then select two or three cases as pathfinder cases and make sure that the case is fully argued from both sides. The complainants would be given the professional resources to argue their case. ( I was very worried in the AIB Prevailing Rate case that an earlier complaint would be decided first. If it had not been argued well, it could have been rejected by the Ombudsman. And while it would not technically form a precedent, the Ombudsman would be aware of it.)

Yes, the bank can appeal to the High Court but the bar is very high : For the High Court to overturn a decision, the Court must conclude that "the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test the court will have regard to the degree of expertise and specialist knowledge of the Ombudsman." I have no doubt that if the customers of Ulster Bank whose earlier complaints had been dismissed by the Ombudsman, appealed to the High Court, that they would have lost in the High Court as well. Likewise, if the Ombudsman had dismissed the AIB Prevailing Rate case, we would not have gone to the High Court.

To me it sounds like a failure of processes within the Ombudsman. If a decision is of the threshold that it affects multiple customers, that it's not just a one off decision reflecting a unique set of circumstances -> then it should go to a high level of review to determine if it is establishes 'precedence'. And then and only then should it be rolled out to all customers.

Brendan Burgess said:

If a complaint is rejected on a particular issue, it does not mean that a different employee of the Ombudsman will reject a complaint from a different customer on the same issue.

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Do they not have quality control within the Ombudsman's office to ensure internal consistency of decisions? I can't imagine that single employees have that much autonomy.

I don't know the tracker stuff at all but I would imagine the Ombudsman himself would oversee these cases as they are very sensitive and he is most likely to end up in the High Court defending them.

Perhaps, the Ombudsman should designate cases as "systemic" and then send them to the High Court for their decision.

But the problem with that is that the Ombudsman is empowered under the Act to "act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without undue regard to technicality or legal form."

The High Court could not do that.

NoRegretsCoyote said:

Do they not have quality control within the Ombudsman's office to ensure internal consistency of decisions?

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It improved a lot under Ger Deering. They became far more consistent. But the legislation is clear that every decision must be decided separately.

But we have had 4 different Ombudsmen. Each one might take a different view from his predecessor. And that is fine.

I did feel sorry for Ulster Bank when they argued in court that two of the decisions upheld by Ger Deering had been submitted while Bill Prasifka was in office. If there had not been such a backlog, they would probably have been rejected too.

I think that the same Deputy Ombudsman signed one decision under Ger Deering and one under Bill Prasifka which reached different conclusions.

Brendan

From a practical point of view, if anyone has had a decision rejected by Ger Deering, they should encourage someone else with the same issue to lodge a new complaint under Liam Sloyan. He might form a different view.

What happens if Johnny takes a case to the Ombudsman and wins while Mary takes the same case directly to the High Court and loses?

I don't know if this has happened. There were about 30 cases on the Prevailing Rate issue before the High Court. I was worried that the High Court might hear one of these cases before the Ombudsman decided, and could have rejected it, had it been argued poorly e.g. by a lay litigant.

Brendan

odyssey06 said:

To me it sounds like a failure of processes within the Ombudsman. If a decision is of the threshold that it affects multiple customers, that it's not just a one off decision reflecting a unique set of circumstances -> then it should go to a high level of review to determine if it is establishes 'precedence'. And then and only then should it be rolled out to all customers.

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The Act says that every case must be decided separately, so the Ombudsman is constrained to a large extent.

One of Ulster Bank's arguments in the High Court was that it was obvious that the Ombudsman had cut and paste the same words in both decisions. (The judge rejected this argument and thought the Ombudsman's approach reasonable.)

I do agree that similar cases should be grouped together and the same reasoning applied.

Brendan

I think that the legislation would have to be changed.

Cases could be deemed by the Ombudsman or by the financial institution to be "systemic".
Either the customer or the bank could appeal to the High Court and the High Court would have a wider latitude to review the Ombudsman's decision.
Not that it must be vitiated by a serious error. But some lower threshold.

Or maybe the the systemic cases could be referred to the High Court before a decision is made for guidance.

But then why should we place more faith in one High Court judge than in the Ombudsman?

As I say, I know that there is a problem, but I don't know what the solution is.

Brendan

odyssey06 said:

To me it sounds like a failure of processes within the Ombudsman. If a decision is of the threshold that it affects multiple customers, that it's not just a one off decision reflecting a unique set of circumstances -> then it should go to a high level of review to determine if it is establishes 'precedence'. And then and only then should it be rolled out to all customers.

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Thinking a bit more of this, I think it could work.

The legislation would have to be changed.

The Ombudsman deems an issue to be "systemic".
Then he makes his decision.
And it would apply to all cases on the same issue.
So if the bank loses, they roll it out to all customers.
But if the customer loses, other customers would have their complaints on the same issue rejected.

It would prevent customers from getting multiple bites at the cherry.

But there would have to be some facility to allow the customer easy access to the High Court to appeal the decision.
The banks will appeal systemic decisions as it would save them a lot if they win.
But customers would not have the resources to appeal.

Maybe the Ombudsman reaches a provisional decision and then refers it to the High Court before it becomes binding.

Brendan

Brendan Burgess said:

Perhaps, the Ombudsman should designate cases as "systemic" and then send them to the High Court for their decision.

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That's a good point.

He has the power under Article 66 of the Act but has it ever been used?

Hi Coyote

I had forgotten that, but it's only on a question of law.


I had submitted a complaint in the early stages of the Ombudsman and Joe Meade rejected it as out of time.

I argued that the overcharging behaviour was continuing so it was clearly in time, and asked him to refer it to the High Court, but he refused.

Brendan

Brendan Burgess said:

But we have had 4 different Ombudsmen. Each one might take a different view from his predecessor. And that is fine.

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I don't see how the above is consistent with the criticism implied by the comment below.

Brendan Burgess said:

I think that the same Deputy Ombudsman signed one decision under Ger Deering and one under Bill Prasifka which reached different conclusions.

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I've said it before that the workings and decisions of the FSPO seem too subjective and dependent on the individuals in place at any point in time. But I'm also not sure what the solution would be to make things more objective and consistent.

Hi ClubMan

I don't know the internal processes of the Ombudsman, but it could be

either A)
Senior staff member/Deputy Ombudsman drafts a decision.
Ombudsman reviews it.
Ombudsman agrees or disagrees or tweaks it.

or B)
Ombudsman decides the policy on a systemic issue
Deputy implements it in specific cases.

So while the decision is in the Deputy's name, she could be reflecting the views of the Ombudsman.

Brendan

ClubMan said:

I've said it before that the workings and decisions of the FSPO seem too subjective and dependent on the individuals in place at any point in time.

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But it's the exact same with the courts.

A judge makes a decision. Usually one side is happy with it and the other side is unhappy with it.

Brendan

@Brendan

As usual some thought provoking stuff from BB.

The FSPO is a mixed bag and what it often failed to do was grasp ultimately the fairness of the matter it as dealing with. It was woeful with Tracker Mortgages initially and then there was a change with AIB. Ulster and PTSB issues much later. It was given extra powers inn the 2017 legislation and one part was not to be overly legalistic. That said if it acted on the jurisprudence of the ECJ with regard to unfair terms in contract it would have seen the light much earlier. To my knowledge it has never referred to UCT yet there have been some very interesting developments in this arena.

Nobody seemed to grasp that with the introduction of tracker mortgages there were two interest rate regimes - tracker and non-tracker. In point the way trackers are being removed as customers sought certainty in fixed rates could yet be declared an unfair term in contract and this becomes clearer the more you observe it. Why should you lose a tracker on fixing - which was the original problem. Again its the unfairness and preying on people's fears.

All that said where the process with the customer is clear and fair by a bank there will be nothing to fear from FSPO. It is deviant, sleight of hand processes that caused the problem.

The Ulster Bank case is important - not because I think UB will win, I think they will lose but the Supreme Court will give deference to FSPO and outline the process it must follow.

WizardDr said:

The FSPO is a mixed bag and what it often failed to do was grasp ultimately the fairness of the matter it as dealing with. It was woeful with Tracker Mortgages initially and then there was a change with AIB.

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What you mean is that you have presented cases which the Ombudsman did not agree with.

In 2010, the Ombudsman upheld this important case which resulted in BoI giving people back their trackers


I have disagreed with some of the Ombudsman's decisions but that does not mean that he is woeful.

Brendan