The new statutory ombudsman for the financial services industry is now expected to operate separately from the new Irish Financial Services Regulatory Authority (IFSRA) to ensure its independence.

An amendment to the legislation, which will put the authority on a statutory footing, has recommended that the new ombudsman should be supported by a council that could include the two industry-funded ombudsmen that already exist but be separate from IFSRA.

This could mean that the Ombudsman for Credit Institutions, Mr Gerry Murphy, and the Insurance Ombudsman, Ms Caroline Gill, could operate in conjunction with the new ombudsman and together work closely with the IFSRA. The council members will be appointed by the Minister for Finance, Mr McCreevy.

The new regulatory structure was designed to provide a one-stop-shop for customers of financial institutions to air complaints and to seek redress where they believe they were badly advised or were mis-sold products.

It was initially suggested that the ombudsman would be incorporated within IFSRA to avoid any confusion for consumers. IFSRA's consumer director, Ms Mary O'Dea, said she favoured retaining this one-stop-shop for consumers but believed it would have to find a means to ensure this did not create confusion.

"We don't want consumers to end up in the situation where they have to determine what type of complaint should be lodged with either the IFSRA or the Ombudsman," she said.

The consumer director envisages the creation of a structure where the authority and the ombudsman would both see all complaints from consumers to ensure it has full information about what is happening throughout the industry.

The ombudsman would bear responsibility for providing redress for individuals whereas the authority would have a remit to take action against a financial institution or to use the complaints to establish trends and problems throughout the industry.

"We want to make sure there is a single point of contact for consumers and create a common system for logging complaints" Ms O'Dea said.

The legislation is due to go to Committee Stage in the Dáil this week and is expected to come into effect in June 2003. In the interim the IFSRA does not have statutory powers to sanction offending financial institutions but is dealing with complaints and making representations to the banks, building societies and insurance companies involved.

It is searching for new premises close to the Central Bank in Dame Street to establish its headquarters. This premises will include a walk-in centre for consumers who can lodge complaints and receive information on its function and on their rights when dealing with financial institutions.