Ombudsman offers window into world of financial folly and misery

Cantillon: Customer service continues to be major flaw in financial service providers

The Financial Services and Pensions Ombudsman’s annual updates are always a cautionary window into a world of poor financial decision-making, downright fraud and customer service that is a mockery to the name. Amid the general misery are the occasional wins, the good news stories of reluctant financial institutions brought to heel.

A small bit of good news for the sector in this year’s Overview of Complaints came with data showing the number of complaints filed last year was down 14 per cent on 2020 at just over 5,000. Less reassuring, however, was the admission that the number of complaints successfully dealt with by the ombudsman’s office was also down – by an even greater 19 per cent, although still ahead of the number of incoming cases.

Bank of Ireland got on the wrong side of the ombudsman more than any other financial services provider, with 16 cases against it upheld in part or entirely. A further seven cases were upheld in whole or in part against another group entity, Bank of Ireland Mortgage Bank.

Tracker mortgages

Others that saw adverse outcomes run into double digits included Permanent TSB, FBD Insurance and Ulster Bank.

Bank continue to be the biggest cause for concern, and tracker mortgages a major issue. Twelve years after the first tracker complaint was lodged, 257 new tracker mortgage complaints were received last year.

Even with 370 tracker cases being brought to a conclusion during the year, 1,115 tracker complaints remain on file, of which 1,017 were classified as active. At the current rate of progress, the tracker mortgage scandal looks set to dog the banks into the 2030s.

Of the 143 tracker cases that were concluded with a legally binding decision, just 21 were upheld even in part, with only eight fully upheld. A further 23 were rejected because a reasonable offer had been made by the lender earlier in the investigation, which was still available to the complainants.

Cryptocurrency fraud

But 99 of those that got to this stage – or 69 per cent – simply did not stand up. The acting ombudsman, MaryRose McGovern, noted that many people continue to have a fundamental misunderstanding of the right they have to a tracker rate. Perhaps, they simply don’t trust the banks’ assurances.

There were some egregious exceptions. In one case dating back to 2011, where a couple switched mortgage provider after wrongly not being offered access to a tracker rate, the lender ultimately agreed to compensate the couple €85,000 to cover the additional interest bill they incurred on their loan.

The bank had originally offered only €5,600 when the couple's loan was examined at the behest of the Central Bank of Ireland's tracker investigation.

Meanwhile, a new threat looms. Figures and case studies in the report point to a growing problem of consumers being tempted into exotic and unregulated investments such as cryptocurrencies with small initial outlays, only to be subsequently defrauded on tens of thousands of euro. And, in most cases, they have no recourse.