1. FSPO publishes its 2022 Annual Report
On 23 August 2023, the Financial Services and Pensions Ombudsman ("FSPO") published its 2022 Annual Report ("Report") which covers the period from 1 January to 31 December 2022. The following is a summary of some of the work highlights detailed in the Report:
- 4,781 complaints were received by the FSPO;
- 4,647 complaints were closed;
- customer service accounted for 28% of complaints;
- €5 million was awarded for individual complainants;
- 80% of complaints were made online;
- 163 decisions were shared with Central Bank of Ireland ("Central Bank");
- 10 decisions were referred to the Central Bank;
- 134 decisions related to tracker mortgages were shared with the Central Bank; and
- 19 business interruption related decisions were also shared with the Central Bank.
The FSPO used its four focus areas to relay much of its work. They include:
Sharing and Influencing
The FSPO publishes its Overview of Complaints every year and includes a report on the financial service providers which have had at least 3 complaints against them upheld. The FSPO also published Digests of Legally Binding Decisions. In its Digest of travel insurance complaints, the FSPO called on insurers to provide clear, comprehensible terms and conditions, as more clarity may potentially lead to fewer complaints. In its Digest on health insurance complaints, the FSPO found that only 15% of consumers felt that they had a very good understanding of their plan, and 27% felt that they had a poor understanding, indicating increased complaints due to a misunderstanding about cover levels.
- 55% of complaints related to banking, a marginal decrease from 2021;
- 24% related to insurance, a 10% decrease;
- 8% related to investment products, a 5% increase; and
- 5% related to pension schemes, a 25% increase.
The top 4 areas of complaints were
- customer service 28%;
- maladministration 17%;
- disputed transactions 11%; and
- claims handling 8%.
The FSPO has also focused on engagement with stakeholders. It made a submission to the European Commission regarding 'enforcement cooperation among European consumer protection authorities, and on adapting dispute resolution procedures for for the cross-border nature of digital markets'. The FSPO proposed that consumers should be able to elect to have their complaint resolved in their place of residence.
The departure of two significant financial service providers did not lead to a rise in complaints to the FSPO, which it attributes to active engagement with relevant stakeholders. Active engagement with regulators such as the Central Bank and Pensions Authority increased during 2022, and has contributed to improving the consumer protection framework. The FSPO has provided contributions to the Consumer Protection Code Review, the Retail Banking Review and the Credit Service Review, as well as offering possible implications of the Zalewski judgment.
Evolving and Innovating
The FSPO received 55 complaints about its customer service, an increase of 16.6% from last year. The FPSO has made significant improvements to its website in response to the overwhelming preference for online communication, but also maintained more traditional, non-digital methods of communication and introduced accessibility initiatives across online and traditional platforms.
In improving its business intelligence, the FSPO has developed technical initiatives to collect and understand data and how it can improve operational decision making, manage business performance and influence complaint trends.
Connecting and Engaging
The FSPO compared its consumer surveys from 2021 and 2022 and concluded that consumer awareness about the FSPO being the body to contact for unresolved financial services complaints increased by 15%. The surveys indicated that awareness was lowest in younger people and certain socio economic groups. In addressing this, the FSPO has launched a successful digital marketing campaign on Facebook and YouTube.
Developing Our People, Building Our Capability
Gender balance among senior management in the FSPO was 66% female and 33% male, with an overall staff of 62% female. The FSPO also has procedures in place in line with the Protected Disclosures Act 2014, GDPR and the Freedom of Information Act 1994. It has also taken actions to ensure that its reporting obligations under SEAI are met.
2. Financial services observations from the CCPC's 2022 Annual Report
On 18 August 2023, the Competition and Consumer Protection Commission ("CCPC") published its 2022 Annual Report ("Report"). The following is a summary of the CCPC's work as it applies to financial services. The CCPC used its strategic goals as the basis for communicating the work it completed in 2022.
Strategic Goal 1: Use powers to deliver effective enforcement and compliance outcomes
Consumer Rights Act 2022
As part of the commencement of this legislation, the CCPC published information for businesses to assist them in complying with the new requirements for selling products, services, digital services and unfair contract terms.
Merger Review Decisions
The CCPC highlighted the importance of its merger review function in protecting consumers and ensuring adequate competition within the market. Within the financial service sector, this can be seen in the significant change in retail banking with the departure of key retail banks from the market, impacting on consumers. The Report highlighted that within the Financial Services sector, there were 6 banking merger determinations. Singled out for specific mention were two merger notifications with commitments to address competition concerns which included:
- Synch Payment Joint Venture (AIB, Bank of Ireland, PTSB)
- Bank of Ireland/Certain Assets of KBC
Private Motor Insurance
The CCPC published their report on their investigation into anti-competitive price signalling in the private motor insurance sector in 2022. Several insurers entered into commitment agreements with the CCPC following this investigation which focuses on implementing and maintaining an appropriate internal competition law compliance programme.
Goal 2: Empower consumers to make informed decisions by providing information about their rights, personal finance and product safety
The CCPC offers helpline supports for consumers by providing them with information on consumer rights and personal finance products. The most common queries received regarding personal finance were:
- Mortgages and Equity Release – 654
- Current Accounts – 435
- Motor Insurance – 303
- Loans – 269
- Insurance (gadget, pet, income protection) – 146
In addition the CCPC's money tools were the most popular section of the CCPC's website with over 794,974 visits. These consisted of:
- mortgage comparisons: 308,784 visits;
- mortgage calculator: 197,339 visits;
- loan comparison: 189,145 visits;
- current account comparison:169,145; and
- money tools homepage:163,796 visits.
Focus on Crypto-Currency
The CCPC published 3 videos explaining crypto-currency on their website entitled:
- 'Understanding Crypto';
- 'Volatility in Crypto'; and
- 'Crypto Scams'.
The CCPC carried out 8 campaigns during 2022, including 6 on personal finance:
- Money Tools – promoting CCPC's free, impartial and easy to use Money Tools;
- How to be Good with Money – promoting information on the CCPC's Money Tools and its role in personal finance on the tv series How to be Good with Money;
- Current Accounts Money Tool – to inform Ulster Bank account holders that they can use the Money Tools to find another provider;
- Current Account Switching – to inform Ulster Bank and KBC account holders that the CCPC Switching Hub contains information about setting up a new account;
- Pension Planning – to explain key pension terms to the public to keep them better informed on pensions; and
- Buy Now Pay Later – to inform customer on what they should know before using this financing option.
Goal 3: CCPC will be a leading voice in representing the interests of consumers and promoting competition
The CCPC engaged with many different shareholders, at national and international level, and sought contributions regarding the relevant policy and legislative developments, cooperation on enforcement and exchange best practices. Within the Financial Services sector these included:
- Central Bank of Ireland ("Central Bank");
- Department of Enterprise, Trade and Employment;
- Department of Finance;
- Financial Service Union;
- Office to Promote Competition in Insurance; and
- Personal Injuries assessment Board.
The CCPC contributed a detailed submission to the Department of Finance's Retail Banking Review, providing a number of recommendations to promote competition and consumer interests. It also contributed to the Consumer Protection Code Review, urging the Central Bank to review its switching code following on from the difficulties experienced by consumers recently switching current accounts. Finally, it advocated to the National Council for Curriculum Investment to include financial education in the Aistear Curriculum and financial literacy in the Leaving Certificate Business curriculum.
In terms of stakeholder engagement, the CCPC engaged with the Central Bank of Ireland to share its experiences and knowledge on different areas of SEPA. This assisted their work in 2022 in driving business compliance for business to consumer transactions.
The CCPC carried out two behavioural trials with the Economic Social Research Institute ("ESRI") on ways to encourage consumers to actively save. The research shows that applying behavioural science to consumer communications and application form designs can increase the uptake of saving accounts by 25%. The CCPC and ESRI developed a guide for savings providers on how to use the recommendations to develop savings products which encourage consumers to save, supporting their well-being.
3. Minister McGrath makes a statement on Bank of Ireland systems outage
On 16 August 2023, the Minister for Finance, Michael McGrath made a statement regarding the Bank of Ireland technical outage which affected customers using the mobile app and 365Online services.
Minister McGrath commented that he had requested that the Central Bank of Ireland ("Central Bank") carry out an assessment on how and why it happened and what can be done to prevent a reoccurrence. He stressed that there is a growing dependence on technology within financial services and urged the Central Bank to assess 'more broadly the robustness of the technology systems used by regulated, consumer-facing financial service providers here in Ireland', along with steps that are needed to reduce the risks of outages that impact customers.
Minister McGrath emphasised that financial service providers must ensure consistency of service for their customers to enable the ordinary functioning of society. Disruptions in the banking sector affect both businesses and the personal lives of people, and customers are entitled to expect uninterrupted access to high quality services.
4. Publication of Commission Delegated Regulation 2023/1651
On 23 August 2023, Commission Delegated Regulation 2023/1651 of 17 May 2023 supplementing the Investment Firms Directive 2019/2034 ("IFD") regarding regulatory technical standards ("RTS") on specific liquidity measurement of investment firms was published in the Official Journal of the European Union.
The European Commission adopted the European Banking Authority's draft RTS specifying how liquidity risk and elements of liquidity risk are to be measured appropriate to the size, structure and internal organisation of investment firms and the nature, scope and complexity of their activities on 17 May 2023.
To ensure a harmonised application of the specific liquidity requirements, competent authorities will have to assess:
- all elements specific to each service provided by the investment firm under Directive 2014/65/EU ("MIFID II"); and
- other elements that could have a material impact, such as external factors, group structure, operational or reputational risks.
The Delegated Regulation will come into force on 12 September 2023, 20 days after its publication in the Official Journal.
5. European Commission adopts Delegated Regulation amending the list of high-risk third countries under MLD4
On 22 August 2023, the European Commission ("Commission") adopted a Delegated Regulation that amends the list of high-risk third countries with strategic anti-money laundering ("AML") and counter-terrorist financing ("CTF") deficiencies under Article 9(2) of the Fourth Money Laundering Directive ("MLD4").
At its plenary meeting on 21-23 June 2023, the Financial Action Task Force ("FATF") added Cameroon, Croatia and Vietnam to its 'Jurisdictions under Increased Monitoring' list ("List"). The Commission noted that the changing nature of money laundering and the constant development of technology, requires that the Commission acts quickly and efficiently in adapting its legal framework on high-risk third countries. The Commission considers that the internal market would be exposed to serious risk, given the integration of financial systems if the European Union ("EU") did not add the countries identified by FATF on its list (Croatia excluded as it is a member of the EU and therefore not a third country) .
Both countries have made high-level political commitments addressing the identified deficiencies and developed action plans with FATF, the implementation of which will be closely monitored by FATF. Because of this, the Commission has classified them as 'High-risk third countries which have provided a written high-level political commitment to address the identified deficiencies and have developed an action plan with FATF'.
The Commission will now submit the Delegated Regulation to the European Parliament and the Council of the EU for scrutiny. If there are no objections, it will come into force 20 days after its publication in the Official Journal of the EU.