Tag Archives | Financial Regulator

Fianna Fail & Consumer Protection – “more image than reality”

In recent days, the chairman of the Consumers Association of Ireland, James Doorley, has been critical of the proposal by the Department of Finance to scrap the Consumer Consultative Panel at the Financial Regulator once it’s merged back into the Central Bank.

Mr. Doorley believes that scrapping this committee appointed by the Minister for Finance would have the effect of preventing “meaningful input into the system of financial regulation”. According to Mr. Doorley:

those who pay should have a say and that the consumer voice should be at the heart of our new system of financial regulation, as it is consumers who are largely bearing the brunt of the financial crisis.

Mr. Doorley is speaking about a talking shop that didn’t meet at all during some of the most devastating months of this financial crisis at the end of 2008. As first reported here on ValueIreland.com, the panel only met once between July 2008 and March 2009.

There was an interesting exchange in the Dail earlier this week in reference to the abolition of this talking shop. Thomas Byrne, Fianna Fail TD for Meath East (one of the local TDs for Mr. Doorley as it happens) made this appeal to the Minister for Finance:

Last night, the Minister for Finance stated that he is consulting the various representative associations and interest groups. I would be keen for him to consult the Consumers Association of Ireland on this legislation and, if possible, to retain the Central Bank’s consumer panel in some form. It is included in the legislation in a different form, but perhaps it should be retained in a bid to keep the public’s confidence. The public is confident that we are looking after the consumer and doing the right thing.

However, more telling of the attitude of Fianna Fail to regulation and consumer protection in general, in response to a retort to James Bannon TD, Deputy Byrne went on to say:

However, keeping the panel would be more image than reality, since the reality is evident in terms of the regulator’s actions.

And there we have it. It’s more important to be seen to do something rather than actually doing anything at all – as I’ve said many times here before, the modus operandi of the current Fianna Fail government.

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Overcharging by the banks – our regulator still only talking a good game

I wrote on Monday about the fact that “naming and shaming” banks and businesses that steal money from their customers isn’t having any effect on either encouraging customers to go elsewhere, or to shame these businesses into not doing it again.

When it comes to banking overcharging, it seems like stronger and more intrusive regulation is the only thing that will truly protect consumers fully.

I should declare though, that I’m not all that in favour of this though – there’s enough information available, for example, to illustrate to consumers that doing business with AIB may not be the best thing for their finances. In such situations, I believe in buyer beware rather than bringing in stronger regulation.

Not that we’ll get any regulation changes anyway

It would have been nice if our new Financial Regulator, Mr. Matthew Elderfield, took the opportunity of the first overcharging incident of his new reign to show that he meant business and acted with purpose on AIB for thieving money from their customers.

So what did he say? Well, according to this report, he didn’t really say much. He sort of whispered, whimpered even. He said he “was concerned that financial institutions “continue to experience control failures” that result in customers being overcharged”.

He also probably scared the pants off the bank executives when he said that “it was clear from recent cases that “change is needed” in how companies handle charging and pricing issue”, and more importantly, that “the regulator was conducting a review “to strengthen its approach concerning the timeliness of resolving overcharging in firms and the grounds for enforcement actions against such failures”.

Wow. We’ve such a better regulator in place now. Much better than his predecessor Patrick Neary who merely, when faced with similar banking overcharging back in 2007, “warned banks that they would be subject to ongoing checks to make sure they were not continuing to rip off customers”.

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What’s the “Consumer Consultative Panel” doing these days?

Short answer – not a whole lot.

During the course of the meltdown in the Irish banking system last year and the revelations regarding the actions (or inactions) of the Financial Regulator, the supposed consumer representatives within the “system” went AWOL.

And now again in 2009, according to this page of meeting minutes, this panel has not met since July of this year.

So, with massive structural changes (supposedly) being undertaken in how our financial regulatory regime will operate in order to better monitor our financial system, not to mention the huge implications of the adoption of NAMA, the Consumer Consultative Panel at the Financial Regulators has again gone missing – their names are here.

In case you’re not familiar with what this consumer panel are responsible for, here are some details from their own section of the Financial Regulator website:

The functions of the Consumer Panel…. and may be summarised as follows:

  • monitoring the performance by the Financial Regulator of its functions and responsibilities under this Act
  • providing the Financial Regulator with comments with respect to the performance of its functions and responsibilities
  • providing the Financial Regulator with comments and suggestions with respect to the performance of the financial services industry
  • when requested to comment on policy and regulatory documents issued, or to be issued, by the Financial Regulator
  • to comment on the Financial Regulator’s draft estimate of income and expenditure and consult with the Minister for Finance before he approves the draft estimate of income and expenditure
  • providing the Financial Regulator with suggestions for initiatives that, in the Panel’s opinion, the Financial Regulator should take with respect to the performance of its functions and responsibilities.

The industry equivalent, the Industry Consultative Panel, has been even more remiss – they haven’t met since June 2009 according to these meeting minutes.

So, with all the supposed changes that are going to be incorporated into the financial regulatory system in order to make sure that the events of recent years do not happen again, it looks like this is all being done without any input from either the consumer, nor even the market participants (through the official channels anyway).

I did contact the people concerned via their website, but as you’d expect, they haven’t bothered to answer.

Update: December 21st, 2009 – I take it all back – I see that the website has been updated since this post was originally published. There are now meeting minutes from September, October and November 2009. You can see what they were actually doing in those meetings here.

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Useless quango reorganisations – Financial Regulator and National Consumer Agency

This story went up on the RTE website yesterday evening – Commission to replace Financial Regulator. The main point of the article is the planned realignment of the industry regulating responsibilities of the Financial Regulator back into the Central Bank (where it resided originally anyway).

However, of more interest to consumers will be the following statement:

The role of informing consumers, currently carried out by the Financial Regulator’s consumer director, will be transferred to the National Consumer Agency, which is being merged with the Competition Authority.

To a certain extent, I think that the principle of this move is to be welcomed. That is, that advice for consumers comes from a centralised organisation – rather than disparate organisations giving frequently overlapping advice to consumers which only serves to further confuse rather than clarify and inform.

But why not go further?

The National Consumer Agency doesn’t always prosecute when it comes to breaches of consumer legislation, but when it does, it names and shames.

The Financial Services Ombudsman does follow up and make judgements in favour of consumers, but they don’t release names of the offending businesses.

Why now, as well as amalgamating the information provision services, bring the consumer protection legislation enforcement responsibilities together into one place as well?

Throw the Financial Services Ombudsman into the mix proposed above, and provide one less place for consumers to have to worry about when it comes to knowing where to go to make their complaints.

That in itself would reduce much of the potential consumer confusion when it comes to who is actually supposed to look after their interests.

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Another mortgage company looking to overstate re-build costs for insurance

Here’s a comment posted recently by a ValueIreland.com reader which is linked to todays topic – rebuild costs for the purposes of insurance policies:

I recently renewed my home insurance with a different provider and amended the building sum insured in accordance with the Society of Chartered Surveyors (SCS) Guide to House Rebuilding Costs published.

I forwarded details to my mortgage provider of the renewed policy and received a response suggesting I reassess the current building sum insured.

I responded and advised that I had used the SCS’s Guide.

I received a further response from the mortgage provider advising that in order to change the building sum insured for your property, the mortgage provider will require a current valuation report drawn up and sent to us by your Valuer/Estate Agent.

The Financial Regulators – Guide Home Insurance Made Easy,on Page 4 advises:

“You should insure your home for the amount it would cost to rebuild it. This is called the reinstatement value. It is different to the market value of your home, which is the amount you could get if you sold it. The market value includes the value of the land your home is built on and the location it is in, but the reinstatement value of your home only covers the cost of rebuilding it. To get a rough estimate of the cost of rebuilding your home, use the home-building cost figures in the ‘Guide to House Rebuilding Insurance’ available from the Society of Chartered Surveyors”

Requiring a valuation report to amend the reistatement value of a property is an onerous and costly requirement.

I have lodged a formal complaint with the mortgage provider and I am still awaiting a response.

So basically I am required to over insure my property or get a valuation report which would cancel the savings I have made on updating my insurance policy!!

The requirement above to get an actual market valuation rather than using the SCS rebuild costs valuations is particularly strange.

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Rebuild costs – mortgage company overstating rebuild costs

Following on from this mornings post about home insurance premiums and re-build costs, here’s one e-mail that I received from a ValueIreland.com reader:

I have a query regarding re-building costs and hope you may be able to offer some advice.

We have a 4 bedroom bungalow, approximately 3,200 sq ft, in Connemara, Co. Galway.  We have a mortgage of €220,000 and our now 5   year old home was valued at €290,000 roughly 3 years ago.

We  recently re-insured with a re-building cost of €350,000.  However, our mortgage providers will not accept this and want us to up this to €400,715.00 when I queried this they came back with 423,000?!

In the current climate we feel that this is way to much as we feel building costs have gone down not up as they have suggested!

This will up our insurance and unfortunately as with most of the country we’re doing our very best to keep head above water and every penny is needed and we don’t feel we should have to back down on this matter.

This kind of behaviour by mortgage companies is unforgivable. In very few scenarios will the rebuild costs of a house increase by such a margin in the current property climate.

Given the difficulties people may have in meeting current mortgage commitments and possibly not getting mortgages elsewhere in the current economic climate, these people are essentially putting a gun to the head of the home owner.

They won’t want to <!– /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:””; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”; mso-fareast-font-family:”Times New Roman”; mso-ansi-language:EN-GB;} @page Section1 {size:612.0pt 792.0pt; margin:72.0pt 90.0pt 72.0pt 90.0pt; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} –>

jeopardise their current mortgage arrangement and many are likely to comply rather than kick up a fuss.

What odds that this mortgage provider also provides the home insurance for this particular consumer?

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More on home insurance re-building costs

I’ve written in the past about the re-building costs of houses in 2009 and the impact that it should have on home insurance premium quotes.

The essential premise is that with the fall in the property market, the actual cost to rebuild your house should have fallen, and since that is part of what your home insurance premium is based on, your premium costs should actually be falling.

The Financial Regulator states that:

You should insure your home for the amount it would cost to rebuild it, or the reinstatement value. This is different to the market value of your home, which is what you would get if you sold it. You can get details of current rebuilding costs from the Society of Chartered Surveyors.

Yet, I have recently received three different complaints from people where their insurance company (or their mortgage company who requires the insurance as part of their T’s & C’s) have actually insisted that the person INCREASE the value of the property for insurance purposes.

I’m struggling to work out why mortgage providers would want to have these values overstated. Obviously they’d want to make sure they’re covered themselves, but if standard practice in the past was to accept the SCS rebuild cost values in the past, what’s changed now?

I know probably why are insurance companies doing this? They’re doing it so that they can charge higher premiums to bolster their profits (or reduce their losses).

What can you do?

  1. First of all, ask your insurance company for a written confirmation of their justification for seeking an increase in the value of the property being insured. You may need this later.
  2. Now check the updated Society of Chartered Surveyors Guide to House Rebuilding Costs for 2009. Work out the rebuild costs for your house, and ask the insurance company to insure your house on the basis of that value – explain where you got this value from, and confirm that this is what the Financial Regulator says that home insurance costs should be based on.
  3. If the insurance company still won’t insure for that value, then ask them again in writing to confirm why they won’t insure the house at that particular value.
  4. Submit an official complaint to your insurance provider along the lines of the fact that they’re going against the recommendations of the Financial Regulator with regards to how they should be valuing the house for rebuild cost purposes.
  5. If you don’t get anywhere with your complaint with your insurance provider, they you should raise a complaint with the Financial Services Ombudsman office.

Of course, you could just find the rebuild cost from the SCS documentation linked above and just go to a few other different insurance companies with the new numbers and get quotes from them. You’re likely to get a better quote from at least one of them, and you won’t have to deal with the crap above.

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Who YOU gonna call? Aid hard to track

Irish News of the World

February 15th, 2009

Diarmuid MacShane

Somebody should do something – but who you gonna call?

As a consumer, you’ve found that you have a problem with a business that you’re dealing with. They’re not helping you out, or they’re ignoring your calls, but you’ve still a problem with their product or service.

But who can help you out?

Since 1998, 200 different government quangos and regulatory organisations were set up with the aim, supposedly, of helping consumers with problems that they may have with product and service providers. There are those that would say that they were just set up so that the government could avoid having to do any actual work themselves – we have nearly 1000 quangos in total today.

As an example, there’s the National Consumer Agency, the Financial Regulator, Commission for Communications Regulation (ComReg), the Commission for Energy Regulation, the Food Safety Authority, the Financial Services Ombudsman, the Office of Director of Corporate Enforcement and the National Property Services Regulatory Authority.

These all sound very grand and important, but when we have problems, which ones can help us get things sorted?

I’ve been very critical in the past on ValueIreland.com of many of these organisations because of the difficulty many consumers are finding in actually getting any help from these organisations. In fact, despite all those that exist, in many cases consumers are being left helpless. However, here’s where you can go with problems that you might have:

If you have a problem with any financial institution that you have dealings with, you are supposed to go through their full complaints procedure. If you still have a problem at the end of that, you need to speak to the Financial Services Ombudsman. http://www.financialombudsman.ie/ If your complaint is related to your pension, the Pensions Ombudsman is there for you. http://www.pensionsombudsman.ie/

So where does the Financial Regulator fit in? They are responsible for overseeing the financial industry in Ireland, supposedly, and will not accept complaints from consumers. The “consumer” arm of the regulator is only an information providing service. http://www.itsyourmoney.ie

Say you have problems with your mobile, land line or broadband, then again, you must first go through the complaints procedure of the company you have the problem with. If you still don’t get satisfaction, you should escalate your complaint to ComReg. Your should remember though, that ComReg will only deal with issues related to “electronic communications services” – meaning you can complain about your mobile network service, but not handset problems, or about your broadband service but not your TV signal even though they may come through the same wires.

What happens if you have a problem with the management company or the managing agent in your apartment block? This is a very murky area at the moment with the National Consumer Agency, the Office of Director of Corporate Enforcement and the National Property Services Regulatory Authority all getting involved.

The National Property Services Regulatory Authority has no powers at the moment, so you can pretty much forget about them. The National Consumer Agency produce booklets and have created a website, but they have no legislation to enforce, so you can ignore them here also.

When it comes to management agents – the companies hired by management companies to look after estates and apartment blocks – there is no actual legislation in place to control how they operate. So, if your management agent isn’t cutting the grass, is neglecting to maintain buildings, or they’re charging more than you think is fair for management fees, there’s not much you can do apart from follow up directly with the agents themselves.

The Office of Director of Corporate Enforcement can help you out if your management company isn’t following company law – for example not publishing accounts each year, or failing to hold an AGM. However, based on my own experience, they’ll treat you like a child for making the complaint, and then won’t do very much at all.

What about electricity and gas suppliers? The Commission for Energy Regulations aim is to make sure that electricity and gas suppliers give their customers a reliable and quality service at a fair and reasonable price.  The main impact that the CER have on our consumer lives is their decisions to raise or decrease the prices we’re charged.

If you want to complain about your electricity or gas supplier, you can escalate your complaint to the CER only if you’ve gone through the companies own complaint procedures first.

And now to my friends in the National Consumer Agency who are responsible for the implementation of over 60 different pieces of legislation aimed at protecting consumers. These regulations cover advertising, unfair commercial practices, consumer information rules, food and other product labelling requirements, product safety laws and rules regarding the pricing of items and the display of prices.

The NCA are also responsible for overseeing the key consumer legislation which governs a lot of our day to day purchasing – the Sale of Good and Supply of Services Act – the law which gives us the “repair, replace or refund” rules of thumb.

You can contact the NCA through their website – http://www.irishconsumer.ie. The only thing to remember is that though they received 70,000 calls in 2007, with 2500 complaints that could have led to prosecutions for breaking the law, they only followed through on 1% of those complaints.

Many of the organisations described above will not get involved in specific contractual difficulties between a business and a consumer – and unfortunately these are the areas where we end up having most of our problems. We pay someone for something and they don’t provide the product or service to the standard that we expect.

That leaves us with probably one of the most effective weapons for consumers – The Small Claims Court. This is a service provided by District Court offices designed to handle consumer claims cheaply without involving a solicitor. This service is only for the “consumer” who has bought a good or service for private use from someone selling them in the course of their business. Claims can only be for up to €2000 in value.

Finally, some of the most common queries received at ValueIreland.com read like “who regulates the price of petrol”, or “who can I complain to about sterling to euro exchange rates”? The answer here is no one. We in Ireland don’t have price controls in place for these types of goods and services. Basically business can charge what they want so it’s down to us to be the regulators – if we don’t like the prices, we shouldn’t buy the products.

You’ll have noticed that I haven’t mentioned my old friends in the Consumers Association of Ireland. The CAI is a pressure group that occasionally provides a helpline for consumers, however they have no statutory powers and therefore can’t actually do anything for you.

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Pointless Financial Regulator survey, again

It’s only a couple of weeks since the pointless Financial Regulator published their last pointless survey and now they’re back with another one – I wrote about it here.
This time, at the start of new year 2009, beginning of January our Regulator is telling us that two-thirds of Irish people are making changes to their personal finances as a result of the recession – the story is here from the Irish Independent.

As a result of the recession?

Or maybe because spending less is one of the most common new year resolutions amongst Irish people – according to The Irish Times anyway.

Did we really need our Financial Regulator to be spending time and money coming up with such a pointless, useless and completely obvious piece of research. It’s shocking that we have a Regulator spending time on such bullshit as this when they can’t actually do their proper jobs and keep banks and insurance companies in toe.

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What’s the point of the Financial Regulator?

If anyone was in any doubt about it, here’s a perfect example of why Irish consumers are suffering under the weight of a huge number of useless regulators in this country.

Last week, the Irish Independent has an article entitled “Watchdog: ‘rates should be displayed’.

At a time when the banks were slowly but surely flushing themselves down the toilet, the Financial Regulator conducted a mystery shopper exercise on 100 foreign exchange outlets to ensure they were observing the rules regarding the display commission levels and exchange rates.

And the result of this exercise? They found that some of the providers weren’t following the rules.

And the response of the useless Financial Regulator? Did they prosecute them for not following the rules? Fines? Closure orders? Name and Shame?

Nope. A Press Release that essentially tells us nothing! Useless or what?

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