The Financial Services and Pensions Ombudsman (the "FSPO") recently published its Overview of Complaints for 2021 which details the actions of the organisation during its fourth year in operation.
The FSPO provides a free, independent, impartial and confidential service to resolve complaints made by consumers in respect of regulated financial service providers and pension providers. Complaints made to the FSPO are resolved either through informal mediation or a formal investigation and adjudication process, which concludes with the issuing of a legally binding decision.
2021 – A Broad Overview
In 2021, the FSPO received a total of 4,658 new complaints and successfully closed 5,010 complaints, making it the second successive year that the organisation has succeeded in closing more complaints than it has received.
- 2,169 complaints were closed by the Customer Operations and Information Management department who review and assess complaints when they are initially received by the FSPO. These complaints were closed for a variety of reasons; 130 were found to be ineligible, 140 complaints were withdrawn and an additional 160 were resolved without the need for further investigation. 1,025 were closed at an early stage for reasons such as not enough information being provided or the complainant reverting to complete the provider's internal complaints mechanism, which resolved the complaint. A further 714 complaints were closed due to legal issues, including complaints regarding non-regulated entities, complaints made out of time, am outside settlement and the matters complained of being considered more appropriately dealt with by another forum.
- 1,820 complaints were closed by the Dispute Resolution Service who aim to resolve complaints through voluntary and confidential mediation. Over 63% of these complaints were closed following a mediation settlement where the complainants received redress and/or compensation or where a clarification was accepted by the complainant.
- 856 complaints were closed by the Investigation Service department. A complaint can be sent forward for formal investigation and adjudication when it is not resolved through mediation.
During 2021, the Ombudsman issued 577 legally binding decisions. Of these, 175 complaints were upheld, substantially upheld or partially upheld. The total compensation directed by the Ombudsman in the legally binding decisions amounted to €941,328.
Of the 402 complaints not upheld, the Ombudsman decided on 91 occasions that the legally binding decision should not uphold the complaint, because in each of those complaints, the early offer of redress from the provider, which remained open to the complainant to accept, was reasonable and adequate to redress the conduct giving rise to the complaint. As a result, it was not necessary to make any further direction. The Report outlines that the value of complaints not upheld due to reasonable offers made was €667,993. Other complaints were settled between the provider and complainant during investigation, and the value of such settlements to complainants was €944,167.
- 165 complaints were closed by the Legal Service department. 162 of these complaints were closed due to jurisdictional issues after an assessment was carried out on each of the files and it was determined that the complaint was not eligible for investigation and adjudication by the FSPO.
Nature of Complaints
The largest category of complaints considered by the FSPO in 2021 related to banking products. These made up 57% of the total number of complaints considered. The top 5 banking conducts complained of were as follows:
- Customer service (28%)
- Disputed transactions (20%)
- Maladministration (14%)
- Arrears handling (11%)
- Application of tracker interest rate (8%)
With respect to complaints in relation to tracker mortgage issues, the Report outlines that the FSPO continues to receive a considerable number of complaints from consumers who assert that they are entitled to a tracker interest rate on their mortgage loan even where they do not have any contractual or other entitlement to a tracker rate. A number of the legally binding decisions issued by the Ombudsman illustrate that there is no general obligation on a financial service provider to offer a tracker interest rate mortgage loan solely because a product of that nature was available from the provider at the point in time when the consumers applied for their mortgage loan.
The second largest category of complaints related to insurance products. Complaints relating to this sector amounted to 27% of all complaints received by the Ombudsman in 2021. The Report notes that the two categories of insurance products most complained about in 2021 were Motor Insurance and Health, Accident and Dental insurance policies.
The insurance sector was responsible for the vast majority of complaints received with a COVID-19 element in 2021. As can be seen from the outcome of the decisions published on the FSPO's website (available here) the importance of the wording of each individual policy itself is determinative of whether a business would be covered for business interruption claims or not. In some of the complaints received, full indemnity was provided, whereas in others, there was none.
Complaints in relation to investments were the third largest category of complaint received by the FSPO in 2021. Personal pension products represented the largest portion of these complaint types, at 35%, closely followed by online share dealing at 30% of all investment complaints.
Finally, pension scheme complaints represent 4% of the complaints received in 2021. The vast majority of these complaints relate to public and private occupational pension schemes, trust Retirement Annuity Contracts and Personal Retirement Savings Accounts.
Investment Fraud and Cryptocurrency – Know the Risks
The Report highlights that the areas of investment fraud and cryptocurrency continued to grow in 2021 and this was reflected in the noticeable increase in the number of complaints received by the FSPO in respect of those areas. This trend appears to be set to continue in 2022. It is noted that the Central Bank of Ireland has recently issued a fresh warning on the risks of investing in crypto assets.
However, it should be noted that the FSPO is limited in the assistance it can offer to consumers who have a complaint in relation to such matters. While the FSPO cannot deal with accusations of fraud, customers have complained to the Ombudsman in relation to the conduct of their financial service provider which has led to authorising financial transactions to fraudulent investment companies or refusing to reverse certain transactions to such entities.
The Report warns that consumers should be mindful of the risks posed by investing in such unregulated activities, which very often carry a higher risk and level of volatility than regulated product offerings.
Active Statutory Appeals and Judicial Reviews
Section 64 of the FSPO Act 2017 provides a legal basis for a complainant or a provider to bring a statutory appeal to the High Court to challenge a legally binding decision of the Ombudsman. Parties to a complaint also have the option to seek a judicial review of the FSPO's jurisdictional determinations.
There were 19 active statutory appeals as of 31 December 2021; 15 of these complaints were matters for the High Court and the remaining 4 were appealed to the Court of Appeal.
A link to the FSPO's Overview of Complaints for 2021 can be found here.