45% rise in financial services complaints

COMPLAINTS TO the financial services Ombudsman have soared by 45 per cent this year amid the turmoil of the economic recession…

COMPLAINTS TO the financial services Ombudsman have soared by 45 per cent this year amid the turmoil of the economic recession.

Ombudsman Joe Meade received 6,000 complaints in 2008, while 2,600 grievances have already flooded into the office this year from individual customers and small businesses regarding unresolved disputes with financial service operators.

Mr Meade said the increase was caused by the recession, a decline in investment values and consumers’ loss of trust in financial institutions. Increased understanding by the public of the Ombudsman’s role also contributed, he added.

The Ombudsman has returned about €45 million to consumers and resolved 87 per cent of complaints since it was established in 2005. The office received 19,000 phone calls and 189,000 people accessed its website last year, an increase of 83 per cent and 61 per cent respectively from 2007.

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Of the 5,947 complaints in 2008, 62 per cent were resolved and 38 per cent had been rejected.

“A few financial services providers were culpable in selling inappropriate products, but to defend those practices to me was to say the least ill-judged and rather foolish,” he said.

There were 3,332 complaints against the insurance sector last year, with 1,453 directed at life insurance companies. Banks caused most concern among credit institutions with 2,065 complaints, a 23 per cent increase from 2007.

Office running costs reached €5 million, including €1.3 million in legal expenses defending High Court actions taken against findings. By the end of the year 0.2 per cent of his conclusions had been appealed, with two judgments against his findings.

The Ombudsman awarded €500,000 when a credit union lost €1 million in a worthless bond and more than €35 million was refunded by a stockbroker to credit unions over bond sales.

The Ombudsman said he was concerned when Irish Nationwide Building Society refunded €1.56 million to customers last year due to his finding against it regarding interest charges on commercial mortgages in 2006. Original estimates reached €6 million, he said. The financial regulator had been advised of concerns on the issue.