The Insurance Ombudsman, Ms Paulyn Marrinan Quinn, insisted last week that complaints already with her office will be handled as usual, despite the controversy now surrounding the scheme.

The resignation last week of a member of the Ombudsman Council, Mr Bill McLoughlin, who alleged that the Ombudsman's Board had systematically interfered with the running of the scheme and attempted to influence decisions and even the contents of annual reports, raises a number of questions about the long-term effectiveness of the scheme, especially after Ms Marrinan Quinn departs in August.

Her resignation came as a surprise to both her staff and the industry, who expected her contract to be renewed. Her departure was announced at the end of a reception a fortnight ago to celebrate the scheme's fifth anniversary and it was there that the Ombudsman laid out its main achievements, including the knock-on effects her judgments have had within the insurance industry.

For example, she noted that it has now been agreed that senior company members will review every grievance case that is referred to the Ombudsman. Her office had, over the years, identified minimum standards of customer care and complaints handling procedures and made recommendations about company sales practices and policy documentation which "have been reviewed and restructured" by member companies.

On her recommendation, training programmes for claim handling staff and sales representatives have also been implemented by some companies. The difficulty with the Insurance Ombudsman's scheme from the very start and Mr McLoughlin's resignation statement referred to it is that it was set up without a huge amount of enthusiasm by a mainly self-regulatory industry under pressure from customers and consumer groups unhappy with investment returns, high charges and a lack of transparency.

While ostensibly independent of its board, and reporting to an Ombudsman's Council, all the funding for the scheme comes directly from the members of the Irish Insurance Federation which unfortunately restricted the terms of reference of the Ombudsman's

office so that two of the biggest sources of complaint disputes regarding brokers who sell the member's life policies, and the investment returns from life policies, could not be dealt with by the Ombudsman.

Because there is no single, independent regulatory authority overseeing the way the life assurance and investment industry operates, the Ombudsman, growing increasingly conscious of the shortcomings in the way life companies and their agents work, ended up taking on a sort of de facto regulator's job.

Not only did she adjudicate on the cases put before her, but she went further by seeking to ensure that individual companies (or the industry collectively) took on her recommendations by re-training staff, re-writing complicated or obscure documents and basically improving the standard of professionalism within their firm. There was never any compulsion for them to do so, however, since the scheme is entirely voluntary.

In Britain, where many of the Irish life assurance companies have their head offices, the Insurance Ombudsman's job is also to adjudicate cases in an objective and cost effective way for everyone. But supervising the industry is the job of the Personal Investment Authority, a statutory regulator.

The Insurance Ombudsman's scheme needs to be widened but if it is going to work effectively, it needs to be just one element in an industry which is also properly supervised and policed by an outside authority that is not answerable to product manufacturers and distributors.