Pricewatch: Bank cock-ups, cybercrime and a no claims bonus muddle

Did you hear the one about the bank that tried to sell a woman’s house without her knowledge and somehow managed to price it at almost €100,000 less than it was worth?

You might have. The case study was contained in the annual report from the Financial Services and Pensions Ombudsman (FSPO) which was published last month.

The woman, who the ombudsman’s office identified only as Cathy – which, at the risk of stating the obvious, is not actually her name – bought her house in 2010 but had to move out a year later after it was badly damaged in a flood.

Cathy fell into arrears and after a few years and with property prices rebounding she decided to sell up, only to discover that her mortgage providing bank had beaten her to the punch and put it up sale without telling her.

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Cathy got her solicitor involved and was able to stop the sale before going on to sell it herself for nearly €80,000 more than the asking price the bank had sought.

The bank – which was not named in the report, sadly – apologised for how long it took to resolve the matter and “acknowledged that mistakes had been made while dealing with Cathy’s mortgage account and property”.

She got €120,000 by way of compensation.

It was just one of many complaints handled by the ombudsman charged with protecting our finances – or at least keeping financial institutions and pension operators in check – last year.

Banks were the subject of most complaints with the ombudsman’s office handling 4,781 issues, up from 4,658 in 2021. The vast majority of cases (4,647) were closed with more than 80 per cent of them resolved through the FSPO’s early assessment process or dispute resolution service, so no investigation was needed.

A further 629 complaints were closed by the ombudsman through its investigation service with 96 either upheld, or substantially or partly upheld with an average compensation of more than €6,400 paid out.

A further 116 were settled during investigation after offers were made by providers, at an average value of more than €8,300.

It was entirely unsurprising to learn that customer service issues were at the root of the highest proportion of complaints last year accounting for 28 per cent of all complaints. “This is a disappointing increase from what was already a significant volume in 2021, at 23 per cent of complaints,” said Liam Sloyan of the FSPO when the report was released.

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The report came and went, meriting a splash in this newspaper and coverage by other media organisations. But given that the FSPO shares much with Pricewatch – in the sense that it too gets a raft of queries and complaints from the public every week – we thought we’d revisit the report.

While a bank’s ridiculous attempt to sell a house without telling the owner and pricing it way below what it sold for was definitely the most outlandish story of ineptitude contained within the FPSO report, there were other case studies we thought were worth highlighting.

Here are just some of the cases and – again – all the names were made up by the ombudsman.

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Cybercrime woes

Then there was a story that sounded a bit familiar to us. Joe invested €250 in bitcoin or at least thought he had.

“Following this, Joe rang his bank and told it that he had invested €250 and someone had taken control of his computer to do so,” the report said.

You might imagine that at this point the bank’s crack team of anti-fraud officers swung into action. Or, at the very least, they put a block on Joe’s account.

No.

“The bank took no action following this information. Joe then changed his mind and rang the company involved to request a withdrawal of his €250. It advised him that to withdraw the €250, he would need to send it €1,000,” the report says.

At this point we were screaming: “No, say it ain’t so Joe.”

“Joe had the company set up as a beneficiary on his online banking and transferred the €1,000 using a security code,” the report says.

“Joe’s bank acted on his request and transferred the funds. Joe was contacted by the supposed bitcoin investment company to be told that his investment was now worth €2,000 and he would need to lodge another €1,000 to release the funds. Again, Joe transferred €1,000 using a security code supplied by his bank. Again, at Joe’s request, his bank transferred the funds.”

Unsurprisingly Joe never received any funds back from the “investment” company. He alerted his bank to this possible fraud and the bank advised him to contact the Gardaí. “The bank also made a request for the return of Joe’s lost funds of €2,250. Unfortunately, this recall was not successful as there were no funds left in the company’s account,” the report says.

Joe made a complaint to the FSPO regarding the bank’s conduct. He claimed the bank should have advised him not to transfer money to the company.

“Joe’s bank believed that he was responsible for the loss of funds as he had used the bank’s security measures to authorise payment,” the report says.

“However, since it had not acted on Joe’s information provided in his first call to the bank, when Joe had advised someone had taken control of his computer to make the transfer, it offered Joe €1,000 in full and final settlement of his complaint due to the service issues experienced by him as the bank dealt with his fraud complaint. Joe accepted this offer.”

Not everyone was as lucky – and we use that word in the loosest possible sense – as Joe.

Thomasina transferred an eye watering €16,300 from her Irish current account to a crypto currency account on the advice of a cryptocurrency adviser.

“Once the funds were in the cryptocurrency account, the money was then transferred to a third-party. Thomasina informed the bank that she had been defrauded of the money transferred and she asked her bank to get the money back,” the report says.

“It explained that it could not as it had no link with the third-party. It said it had legitimately transferred the funds at her request to the cryptocurrency account, but it had no access or control over the third-party account,” the report says.

“Thomasina complained to the FSPO regarding the bank’s conduct in failing to refund the money transferred. Thomasina felt that the bank should have warned her not to transfer the money to the adviser, but the bank clarified that it had facilitated the transfer of the money, on her instruction, to the cryptocurrency account and it had no knowledge of the adviser at the time of transfer. It had transferred the money, at her request, to the cryptocurrency company. Thomasina closed her complaint.”

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Insurance inquiries

Another complaint was made to the FSPO by the executor of Siobhán’s estate.

“When Siobhán died, two issues arose in relation to her property investments,” the report notes.

“Firstly, her estate did not realise that her mortgage payments would not automatically continue to be paid from her bank account which contained more than enough funds to cover all payments. Secondly, her probate was delayed by issues concerning her insurance policies.”

This led to a delay in redeeming her mortgages and the building up of arrears, although they were eventually paid in full.

That should have been that. But it wasn’t.

“The original mortgage provider sold the charge over Siobhán’s properties after the mortgages had been fully paid, as it had started the sales process when the loan was still in arrears and later forgot to remove the mortgage from its sales list,” the report says.

“When Siobhán’s executors went to sell the properties, they could not do so as there was still a charge showing on the mortgages. They had asked tenants to leave the properties so they were no longer receiving rents and were paying legal fees to try to get the situation sorted.

“The original mortgage lender apologised for the delays caused and offered €17,500 to cover lost rent and legal fees in full and final settlement of the complaint, which was accepted by Siobhán’s estate.”

Next up was David. Due to bad weather his car was involved in a single-car incident. “To get the car repaired, he made a claim on his policy. Two years later he was involved in an accident with a pedestrian. He reported this accident to his insurance company, but no claim was made,” the report says.

“After this notification, David’s insurance company brought his no claims bonus down to two years from nine and charged him a higher premium. David did not understand this, as the pedestrian had not made a claim.

“He tried to get clarity from the insurance company as to what was going on. He felt he received extremely poor customer service, including failed call backs and lots of confusing information.”

A mediation process followed during which the insurance company explained that anyone injured in an accident has two years in which to lodge a personal injury claim.

“They also said that when a policyholder notifies them of an incident, and it represents a second claim in three years, it removes the no claims bonus (as per the policy document) and imposes a loading until an annual review of the incident,” the report details. “If no third-party claim has been submitted in that time, it will reinstate the no claims bonus and refund the premium loading.”

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After the mediation, the provider agreed to reinstate the no claims bonus and loading if no third-party claim had been made by the anniversary of the first year of the incident and offered €800 for the poor service experienced by David in full and final settlement of his complaint.

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The report also details the case of Jeremy, who moved to Australia in 2017. Following the move he received correspondence from his bank in Ireland to state that there was a debt of $102.03 Australian dollars owed on the account. Jeremy contacted the bank by phone and paid the outstanding balance. Jeremy also requested the account to be closed.

He received further correspondence in October 2021, to state that there was a fee of €37.26 outstanding. “He disputed this as he was of the view the account was closed, with any debt cleared,” the report says.

“Jeremy was anxious that his credit history would not be impacted as a result of this incurred charge. On receipt of the complaint at the FSPO, the registration officer advised Jeremy that he needed to complain to the bank first.

“Jeremy did so but did not receive a ‘final response letter’ within the standard time frames. The FSPO contacted the bank and requested that it review the complaint within 10 working days. Jeremy was contacted by the bank within five working days with a resolution to the complaint.”

The account was closed.

* The Financial Services and Pensions Ombudsman investigates customer complaints in relation to the financial sector, including banks, building societies, credit unions, brokers, money lenders, hire-purchase providers, health insurance companies and retail credit firms. Given the complexities of the cases – and the sometimes intimidating responses from financial institutions when challenged – the process can be slow. But it can often get results that are beyond individual consumers.

Details of how to make a complaint plus all the necessary documentation can be found on its website – fspo.ie. It can also be contacted at 01 567 7000.