The new Financial Services Ombudsman

Brendan Burgess

This is my summary of the role of the new Financial Services Ombudsman as proposed in the new IFSRA bill

The Minister for Finance will appoint a Council of between 5 and 10 people.
The members are to be drawn from those with knowledge or experience of consumer finance issues and those with knowledge or experience of the finance industry.
The Chairman will be someone from the Consumer side.

They will appoint the Ombudsman and Deputy Ombudsmen
The staff of the existing Ombudsman schemes will transfer to the new Ombudsman.
The existing Ombudsmen will be appointed Deputy Ombudsmen

The Ombudsman will be completely independent

The Ombudsman is obliged to act in an informal manner and according to equity and the substantial merits of the complaint without regard to technicality or legal form.

The Ombudsman is to try to resolve the dispute by mediation and can take oral evidence.

the Ombudsman may uphold a complaint on the following grounds:
a)* * * * the conduct was unlawful
b)* * * * the conduct was unreasonable, unjust, oppressive or discriminatory
c)* * * * the conduct, although lawful or in accordance with industry codes of conduct, was unreasonable, or unjust in its application to the complainant.
d)* * * * The conduct was based on an improper motive, an irrelevant ground or an irrelevant consideration
e)* * * * The conduct was based on a mistake of law or fact
f)* * * * The explanation for the conduct was not given when it should have been given
g)* * * * The conduct was otherwise improper

The decision of the Ombudsman is binding on both the institution and the consumer. Either can appeal to the High Court whose decision is final.

The Ombudsman has substantial powers – he can demand documents and hear evidence under oath. He can carry out inspections on the institution’s premises.

The Ombudsman is obliged to co-operate with IFSRA. In particular, he must convey all his decisions to IFSRA and point out any patterns in the complaints where he believes that an institution is in breach of the codes or law.

The role of the Council for the Ombudsman
It sets the maximum compensation to be awarded.
It sets the guidelines for what factors should be considered
It sets the procedures to be followed by the Ombudsman
(But these regulations must be approved by the Minister for Finance)
It gives advice to the Ombudsman
It offers a sounding board for the Ombudsman
It decides on the funding levels.
It does not deal with complaints. Only the Ombudsman or his staff deal with complaints.

I have a much more detailed summary and analysis of the legislation. Email me at if you would like a copy.

Brendan Burgess


Differences between the proposed Ombudsman and the existing Ombudsman for the Credit Institutions

The New Ombusman will be comepletely independent. The guidelines will be set by the Council.

There is no limit on compensation, although the Council may set a limit

The New Ombudsman should be more informal. The existing Ombudsman will only deal in writing and very formally

The new ombudsman will deal with all financial institutions

The new ombudsman will not deal with commercial complaints, whereas the existing ombudsman deals with small companies.

The new ombudsman is much more powerful. He can examine employees under oath and visit premises

Under the existing system, a complainant who doesn’t like the decision of the ombudsman can initate legal proceedings in the lower courts. Under the new system, the decision of the new ombudsman is binding on the complainant, who can only appeal to the High Court.

The New Ombudsman can direct an institution to alter its practices whereas the existing Ombudsman deals with issues on a case by case basis. The New Ombudsman has to send its decisions to IFSRA who may use them to see if laws or codes of conduct are being broken


Justification for new Ombudsman?

The IBF was against the introduction of a Statutory Ombudsman, favouring instead the current arrangement.

That, in itself, is sufficient justification IMHO.