The Financial Services Ombudsman has called for a change in the law to allow his office legally ‘name and shame’ companies guilty of wrongdoing.
Bill Prasifka said today the legislation governing his office did not explicitly address the power to name financial service providers in its findings.
It had taken the view, supported by external legal advice, that it did not have the legal authority to name firms under the current legislation and it would not do so until the legislation was changed.
Addressing the Insurance Institute of Ireland at the RDS in Dublin, the ombudsman noted that his office publishes detailed summaries of anonymised complaints about financial institutions.
He said those reports frequently contained findings that the activities of certain unnamed firms had fallen below, and sometimes “considerably below”, relevant legal, regulatory, equitable and ethical standards.
“I believe that this method of operation of the office is inconsistent with our overall statutory objectives and is ultimately not sustainable,” Mr Prasifka said.
“We are here to promote the integrity of the financial services industry in the eyes of the public. It is difficult to understand how this can be achieved if our public profile can be characterised as the publicising of industry wrongdoing while simultaneously shielding the wrongdoers from public accountability.
“If certain firms are operating unscrupulously, why can’t the public at least know who they are? Why does the office in fact refuse to tell the public who the wrongdoers are?”
Mr Prasifka asked how his office was to contribute to promoting the integrity of the financial services sector if its public interventions “only reinforce the public perception of the ineffectiveness of the current regulatory regime”.
He said the office needed to change how it conducted his business.
“This in turn requires a legislative framework that allows it to operate successfully so that it is in a position to fulfil its mission going forward.
The ombudsman said that in considering any amendments to the legislation to permit it to name financial services providers subject to an adverse ruling, it was important to bear in mind certain policy considerations relevant to any such ‘naming and shaming’ provision.
He said nothing should be done to unduly compromise the ability of the office to carry out its “unique, informal and expeditious approach to adjudication”.
An obligation to publish all findings in their entirety would be “counterproductive” as it would lead to delays and make it more difficult for the office to carry out its work.
“Nothing should be done to discourage complainants from coming forward. Any publication system must protect the identity of complainants,” Mr Prasifka said.
He said publication of detailed summaries of anonymised individual findings alone was “unlikely to be helpful to an aggrieved public”. His office was of the view that, at a minimum, it should have the “express statutory power” to name firms against whom an adverse ruling has been made.
The changes should allow the ombudsman name the firm, the product or service at issue, the nature of the complaint (such as mis-selling or breach of contract) and the amount or type of award made.
Advocacy group Age Action said it had long campaigned for such ‘name and shame’ powers for the Financial Ombudsman in the wake of a long series of cases of financial mis-selling to older people which he had investigated.
“In many cases unnamed financial institutions have driven a coach and horses through the Consumer Protection Code and, while substantial awards have been made against them by the Financial Ombudsman, the public remains unaware of who they are,” said Age Action spokesman Eamon Timmins.
“Publication of the names of these companies would be a major incentive for these firms to get their act in order and live up to their legal and ethical obligations to all customers, but especially older customers.”