Financial complaints rise under ombudsman

Complaints against financial institutions have increased 19 per cent since the introduction of a statutory ombudsman scheme, according to figures released yesterday by the financial services ombudsman, Joe Meade.

Mr Meade's office, established earlier this year, received 1,709 complaints from consumers from April to September. This compares to 1,437 complaints received by the voluntary credit institutions and insurance ombudsman schemes over the same period in 2004.

Mr Meade has written to the financial regulator recommending that mortgage lenders be obliged to give consumers more information about how to cancel mortgage protection policies in cases where loans are paid off early.

The intervention followed a complaint from a borrower who repaid her loan early but continued to pay for unwanted mortgage protection, a form of life assurance, for two more years.

Mr Meade has also written to the regulator in relation to two other industry-wide areas of concern, which he said he would identify in his next report.

The ombudsman yesterday released details of 14 cases where he has made rulings.

The highest compensation sum granted to date was €56,000, which Mr Meade awarded to an elderly couple who were sold an unsuitable high-risk investment.

The couple were both approaching 70 years of age and the husband was suffering from a severe disability. They invested €127,000 in a high-risk product and by the time it matured four years later, its value had shrunk to just €34,000. Mr Meade ruled that the provider had not explained the risks properly and had failed in its duty of care.

Motor insurance was the most contentious financial product for consumers, giving rise to the highest number of cases, with 179 people making complaints.

This was followed by travel insurance, where there were 167 complaints, and account transactions, which generated 149 complaints. There were 122 complaints about lending disputes.

Mr Meade attributed the rise in complaints to publicity surrounding the opening of his office and the inclusion of credit unions in the scheme for the first time.

Since August 1st, the date that the ombudsman's office started accepting complaints in relation to credit unions, around 15 complaints have been made.

The ombudsman can make awards up to €250,000. Rulings are binding on both parties subject to appeal to the High Court.

More information is available at www.financialombudsman.ie.