# Questions  for the Financial Services Ombudsman and the Central Bank arising  from the ptsb issue



## Brendan Burgess (31 Jul 2015)

This redress programme would not be happening were it not for the fact that the FSO upheld complaints from ptsb on the issue and permanent tsb appealed the decisions to the High Court and Supreme Court thus raising awareness of the issue.

However, despite upholding some complaints, the FSO rejected other complaints on the same issue. Here is an excerpt from one such decision issued by the FSO.


_A condition of obtaining the tracker rate was that the fixed rate must be maintained until the date of its expiry. The decision of the Complainant and her husband to terminate the fixed rate of interest in favour of a variable one before the fixed rate was due to expire caused the Bank's commitment as outlined in Condition E to come to an end. _

This was permanent tsb's argument in the High Court, which Justice Hogan described as:

"This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers."

Yet, in some cases, the FSO was persuaded by this argument.

Fortunately, the Central Bank has told ptsb to restore the trackers to these people whose complaints to the FSO had been rejected.

*The FSO must review how it handled these cases to see how this happened.*

Where the interpretation of a clause is common to a lot of complaints, and the consequences of the Ombudsman's decision are huge, then the FSO needs to devote a lot of resources to arriving at the correct decision. 

It may even be appropriate to state a case to the High Court on the issue where Senior Counsel could argue the issue.

Of course, the FSO must adjudicate on each case separately, but the principle should be established first.

*The FSO should publish its thinking on commonly occurring complaints *

In this case, the FSO should have published its interpretation of the ptsb clause. If there were variations of the clause, which would have resulted in a different decision, those should be published as well.

This would allow the consumer to decide if there is any point in taking a case. It would also allow the financial services provider to decide if there is any point in defending such a case.

*The role of the Central Bank needs to be investigated *

When the FSO sees a systemic issue, they may draw it to the attention of the Central Bank.

In the past, it was the Central Bank's policy to say "Thank you very much." but give no further feedback to the FSO. Bizarrely, the CB claimed that it could not give any feedback to the FSO because of the Central Bank Act's obligations of secrecy. I don't know if that is still the policy. 

So did the FSO refer the ptsb issue to the Central Bank?
If they did, when did they refer the issue?
What did the Central Bank do about it?
Why did the Central Bank do nothing until June 2014.

Many people lost their homes from 2009 to 2015. This could have been prevented if the CBI did their job properly.


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## shoppergal (31 Jul 2015)

Brendan, I think I recognise that as my letter from the FSO. Delighted to report I received my letter from PTSB today. Many thanks for your help on this.


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## Sophrosyne (31 Jul 2015)

Brendan Burgess said:


> *The role of the Central Bank needs to be investigated *
> 
> When the FSO sees a systemic issue, they may draw it to the attention of the Central Bank.
> 
> In the past, it was the Central Bank's policy to say "Thank you very much." but give no further feedback to the FSO. Bizarrely, the CB claimed that it could not give any feedback to the FSO because of the Central Bank Act's obligations of secrecy. I don't know if that is still the policy.


 
That seems an absurd policy.


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## Brendan Burgess (1 Aug 2015)

Here are extracts from Section 33 AK 

(1A) A person to whom subsection (1) applies shall not disclose confidential information
...


(5) Subject to F194[subsection (1A)], the Bank may disclose confidential information—

(b)* with the consent of the person to whom the information relates* and, if the
information was obtained from another person, that other person, or

(af) if the Bank* is satisfied that the disclosure is necessary to protect consumers*
of relevant financial services or to safeguard the interests of the Bank, or

F203[(ak) to the Financial Services Ombudsman that is required for the performance
of that Ombudsman’s F204[functions, or]]


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## Brendan Burgess (1 Aug 2015)

It's very clear to me that the Central Bank *may *disclose information to the FSO, but I gather their response in the past has been that there is no obligation on them to do so. I don't know if the practice has changed recently. 

I quote the other sections as well.  There was nothing in June 2014 to stop the Central Bank from saying "We are looking into the way ptsb has handled the way people have broken out of fixed rate contracts and lost their trackers." 

That would be necessary to protect consumers, some of whom have lost their homes since the CBI investigation began. 

And, of course, at any stage, they could have got ptsb's permission to disclose this. 

The Consumer Panel of the Financial Regulator, which I chaired, made many submissions on this issue but we got nowhere. 

Brendan


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## Brendan Burgess (1 Aug 2015)

The Central Bank Act also provides for co-operation between the FSO and the Central Bank

57CQ.—(1) The Council and the Financial Services Ombudsman shall co-operate with the Bank and the Pensions Ombudsman with a view to ensuring that the provisions of this Part operate in a way that contributes to promoting the best interests of consumers of financial services and to the efficient and effective handling of complaints.

(1A) The Financial Services Ombudsman shall, whenever asked to do so by the Bank, provide the Bank with records or copies of records, or information, dealing with specified matters, or matters of a specified kind, relevant to the performance of the Bank’s functions.


(2) The Council and *the Financial Services Ombudsman may make recommendations to the Bank* and the Registrar of Credit Unions with respect to measures that the Bank and Registrar might take so as—
*(a) to effectively deal with persistent patterns of complaints made against specified regulated financial service providers or against a specified class of those financial service providers,*
(b) to improve the way in which regulated financial service providers deal with complaints that are made against them, or
(c) to effectively deal with any other matter relating to promoting the interests of consumers of financial services.


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## Raging Bull (1 Aug 2015)

there is a cooperation agreement between the FSO and Central Bank perthe llegislation regarding sharing of information  It works both ways but is essentially a one way street.When I had my case with FSO I demanded they enforce it and get info from Central Bank. The CB had the info to prove my case but refused to give it to me for confidentiality...I imagine I rocked the boat because nobody ever asked for it. You should also read FLACs review of FSO and it touches on the point of sharing information,  Its depressing their findings saying its informal, unstructured hap hazard and implicates not a lot happens,,, the system is a complete failure the only solution is to remove the consumer protection mandate from CB they essentially could not give a toss...the fact I had to demand the FSO do this shows problems with how they review cases, I was asking for discovery to ensure a fair hearing...it didn't look like it was forthcoming so I withdrew the case to go legal where I would get discovery...this is entirey contrary for the whole reason of the FSO office


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## Brendan Burgess (2 Aug 2015)

Hi Bull 

Good point. 

*Memorandum of Understanding between the Central Bank of Ireland, the Financial Services Ombudsman and the Pension Ombudsman*

Here are the key extracts: 



Broader issues of consumer protection are the responsibility of the Bank and, if such issues are brought by consumers to the attention of either Ombudsman, the Ombudsman will refer them to the Bank for consideration and will inform the consumers accordingly. 

The Co-operating Authorities recognise that close co-operation and communication with each other will be of particular importance, because their functions are closely related.  In particular, it is recognised that there will be mutual benefits in ensuring that systemic and/or serious patterns of complaints are acted upon at the earliest opportunity, to improve the general position of consumers of financial services.

If an Ombudsman feels during his investigation of a complaint that a matter indicates an issue that may be of concern to the Bank, he will inform the Bank.

The Co-operating Authorities recognise that the exchange of information between them will be an important dimension contributing to the efficient and effective handling of complaints.  They are equally conscious of the need for discretion and for the adoption of procedures that protect (i) the interests of individual complainants, (ii) the confidential nature of certain information, and (iii) the professional secrecy obligations of the Bank  under Section 33AK of the Act and EU law, to which the terms of this MoU are subject (where applicable).

Without limitation to the above, the Financial Services Ombudsman will provide the Bank with further detailed and specific information relating to a complaint (or complaints) for its general consideration:


Where the circumstances of the case appear to call into question:

a financial service provider’s fitness and probity;
or whether any specified person may not be a fit and proper person to carry on a relevant function;
or if it appears that a criminal offence or a serious regulatory contravention has occurred.

If it appears that a complaint or a series of complaints may give rise or are giving rise to issues of regulatory relevance to the Bank (whether or not the financial service provider  has itself drawn the issues to the attention of  the Bank).


If it appears that it would be desirable and appropriate for the Bank to consider using one or more of its regulatory tools, including the exercise of its investigative and other enforcement powers, the making of rules or the giving of guidance to financial service providers.


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## Brendan Burgess (2 Aug 2015)

Conor Brophy will be interviewing Ger Deering the Financial Services Ombudsman on This Week at 1 pm on RTE Radio 1.

According to the promo, they will be discussing the permanent tsb issue. 

Padraig Kissane will be on as well.

Brendan


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## Sophrosyne (2 Aug 2015)

Brendan Burgess said:


> However, despite upholding some complaints, the FSO rejected other complaints on the same issue.


 
I think that this is an extremely important point and may be at the heart of what is going wrong.

I am looking a this, which is a cold case review of FSO findings carried out by Harold A. Whelehan, S.C.

From this review, it appears that findings can differ depending on how complainants present their cases and may also depend on the competence of individual investigators, some excellent; some not so.

Take this case, for instance, while it does not relate to PTSB trackers, I think it illustrates the point.

A complainant contended that the bank misinterpreted how Tax Relief at Source should be applied to his account, resulting in a TRS loss of €550.80​ 
The bank contended that it wrote to the complainant on a date in November 2013, notifying him of Revenue directions relating to TRS and enclosed a document of FAQs and answers to those questions to enable him to decide how he might rearrange his affairs.​ 
The complainant claimed he did not receive the letter.​ 
The Ombudsman accepted that the bank wrote to the complainant (though no precise date in November could be established).

The Ombudsman also believed that the complainant did not get the letter.

The Bank offered the complainant €100 in November 2014.

The complainant questioned whether the change in operation of TRS was Revenue driven or a misapplication of Revenue direction and quoted a Revenue official dealing with TRS in the Collector General's Office, whom the claimant alleged in a letter of 14 May 2014 would refute the bank's interpretation. This letter also suggested that Revenue's website would not confirm the bank's application of TRS.

In the event the complaint was not upheld.

*Comment by Harold A. Whelehan, S.C.*
"In this case, while the Finding went against the Complainant, there was no follow-up enquiry with the Complainant or with the Revenue as to whether his contention could be correct as to the alleged misinterpretation or mis-application of the Revenue provisions by the Respondent.
It appears that he could have been invited to procure evidence from the identified official to whom he spoke which could have been obtained either through the Complainant or through the Bank and also the question of information disclosed on the Bank's website could, and perhaps should have been investigated, in order to specifically deal with the Complainant's allegations."
​The FSO did not uphold the complaint despite not checking with Revenue as to whether the bank was right or wrong.

If the complainant had had the foresight to realize that the FSO would not check and produce evidence from Revenue himself or if his case had been handled by someone else, the outcome might have been different.


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## AAM_User (2 Aug 2015)

Brendan Burgess said:


> Conor Brophy will be interviewing Ger Deering the Financial Services Ombudsman on This Week at 1 pm on RTE Radio 1.
> 
> According to the promo, they will be discussing the permanent tsb issue.
> 
> ...



Did anyone hear this?  Unfortunately wasn't near a radio at the time


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## Raging Bull (2 Aug 2015)

Ok if you want to have a good cry read this

*
FLAC: Okay… and in terms of numbers,


systemic issues could you tell us

how many systemic issues, let’s say,

that have been reported by yourselves

to the Central Bank?

FSO Staff: *If my memory serves me


right, (the Ombudsman’s) probably

only written to the Central Bank on

one or two occasions.

*FLAC: So it’s plainly more sort of by

meetings and by dialogue and informal

and so on. Have you any data for

us on the outcome of the reports; can

you give us anything on that?

FSO Staff: *No, we wouldn’t. 234



Report in full http://www.flac.ie/download/pdf/redressing_the_imbalance.pdf

The points you are refrerencing Brendan are cerca page 100


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## phil (2 Aug 2015)

AAM_User said:


> Did anyone hear this?  Unfortunately wasn't near a radio at the time




You can listen to it on podcast.
http://www.rte.ie/radio/


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## Sophrosyne (2 Aug 2015)

Raging Bull said:


> Ok if you want to have a good cry read this
> 
> Report in full [broken link removed]


 
I thought this extract from an interview with the Central Bank was priceless:

*"FLAC - Who is enforcing the (consumer credit) Regulations?*

*Central Bank -* We're responsible for enforcing it... but it's difficult for us... that's why a lot of the time we rely on the Code [Central Bank Code of Conduct], because we've done the work to clarify what is in and what isn't in, so people are in a better space rather than looking at Regulations that have been transposed, or Directives transposed in the Regulations and they weren't necessarily transposed properly.

*FLAC - It's your Code.*

*Central Bank -* Yes, and people are less likely to challenge us to be perfectly honest on the Code as they know it's our code."


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## Brendan Burgess (7 Aug 2015)

Here is some more stuff on the Central Bank's attitude  to its role: 

http://www.irishtimes.com/business/...ability-to-monitor-insurance-sector-1.2243456

Mr Carrigan[ of the Department of Finance]  asked Mr Roux to provide a statement outlining how the Central Bank was dealing with these [insurance ] issues, and an “assurance” it would take the “necessary action to underpin the financial stability of the system”.

Mr Roux sent a reply to secretary general [broken link removed] on March 20th.

“In my role as deputy governor [financial regulation] I am accountable to the [Central Bank] commission and to the [broken link removed] but I do not report directly to the department of finance,” he said.


*Information sharing *
Mr Roux said Mr Moran’s position on the commission was the “statutory avenue” for “information sharing” with the department on supervisory matters.


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## Bronte (10 Aug 2015)

Here's Charlie Weston of the Independant pointing out that the Central bank knew about this since 2008 (not 2009) and basically seem to have done nothing, despite repeated requests from him for clarity

http://www.independent.ie/business/...efore-acting-on-tracker-scandal-31436266.html

_The State's leading watchdog was warned six years ago about the scandal of banks like Permanent TSB trying to take valuable tracker mortgages off homeowners, it can be revealed.

The then Financial Services Ombudsman wrote to the Central Bank in 2009 calling for a probe across all the banks._

*But actually it goes back further to 2008*

_The Central Bank was asked repeatedly by this newspaper over the last three days how long it had known about banks, and specifically PTSB, taking away trackers from those who opted for a fixed rate for a short period.
Yesterday, a spokesman said: "The Central Bank has been actively considering tracker-related issues as far back as 2008_

*Burgess mentioned also in the article.*

*And here's more of it from the Central Bank*

_But it refused to give specific details about its actions in relation to Permanent_ TSB.


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## Bronte (10 Aug 2015)

It is quite clear the Central bank has question to answer and they are being evasive with the newspaper's probing, with a general reply that they wrote to the banks, but nothing specific about anything.

Editoral

http://www.independent.ie/opinion/editorial/central-bank-found-napping-on-the-job-31436250.html

_But for the Central Bank - in the guise of the Financial Regulator - to preside over such inequity while having being warned, is nothing short of disgraceful._


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## Bronte (10 Aug 2015)

What's quite extraordianry is that it was Burgess going back and finding an article in the Independant from 2009 that highlighted that the Central Bank had been informed, otherwise they might well have said they knew nothing, but it's clear their response was beyond pathetic.  The little people do not matter.


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## Gerry Canning (10 Aug 2015)

I find the (new) interest in whether our FSO / Central Bank are questionably (fit) for purpose on this PTSB issue raises  much much bigger issues..

1. Are FSO/Central Bank even attempting to do their job ,or is it as appears to me ,both entities tie us up in gobbly gook?
The net result is nothing much is done for Consumers.

2. A huge issue is on Payment Protection Insurance (PPI) ,
 if statistically we are on a par with UK on PPI sales and PPI miss-selling , we are looking at Consumers being due Refunds of 2.5 BILLION. Yes 2,500,000,000 !
(surely our FSO/Central Bank knew PPI was a live issue?)

Agree with Bronte {little people do not matter} !


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## Brendan Burgess (10 Aug 2015)

Michael McGrath has asked the Oireachtas Finance Committee to investigate the role of the Central Bank in this. 

*PTSB role on tracker mortgages needs investigation - McGrath *


“Revelations in the today’s _Irish Independent_ that the Financial Services Ombudsman wrote to the Financial Regulator as far back as 2009 asking that the office investigate whether banks were trying to remove tracker rates from mortgage-holders raise serious questions about the tardiness of the Central Bank in dealing with this vital issue of consumer protection.”

“Revelations in the today’s _Irish Independent_ that the Financial Services Ombudsman wrote to the Financial Regulator as far back as 2009 asking that the office investigate whether banks were trying to remove tracker rates from mortgage-holders raise serious questions about the tardiness of the Central Bank in dealing with this vital issue of consumer protection.”

Brendan


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## Raging Bull (12 Aug 2015)

CB are on record saying they put stability ahead of consumer protection..it really begs the question if this had not gone to court (consumer winning too) would they have let it slide


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## Brendan Burgess (13 Aug 2015)

Hi RB 

Financial stability is the ultimate consumer protection.   They are right to prioritise it, but a balance has to be struck. I don't understand the Central Bank's inaction in this case. I doubt if they are claiming financial stability. I assume it's just their general incompetence. 

Brendan


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