Part 1 - Executive Summary 4

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Financial Services Ombudsman

Bi-Annual Review 2013

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The total number of Complaints made increased by 27% in comparison with the same period last year. This is not unexpected as the office continues to be a focus point in the resolution of a myriad of legacy issues arising from the financial crisis. However, the level of increase in complaints has put unprecedented strains on the capacity of the office as it necessarily strives to resolve cases at a rate approximating the increases in demand for its services.

Insurance comprises of 50% of all complaints received and this is broadly consistent with outturns of previous periods. 44% of Insurance complaints relate to Payment Protection Insurance (PPI). PPI complaints comprise of 22% of complaints overall and have increased 150% from the same period in 2012 from 410 to 1027. The increase in these complaints can, in part, be attributed to the Review directed by the Central Bank of Ireland, into the sale of Payment Protection Insurance (PPI) Policies from 1st July 2007, and media coverage on the issue.

Banking complaints constitute 36% of complaints received overall. The two main product types complained of are mortgages and accounts.

Mortgages complaints have increased 51% on the same period last year rising from 499 to 757. We expect this trend of increasing complaints on mortgages to continue in the future. A significant portion of these complaints received are in relation the repayment terms offered by banks after the mortgages arrears resolution process (MARP) has been completed. Complaints pertaining to the information, or lack thereof, given when switching from tracker rate to a variable or fixed rate of interest are still prevalent.

30% of banking complaints relate to accounts. The complaints here largely relate to maladministration and customer service and frequently relate to relatively small amounts at issue. This office would look to the banks to reduce the amount of complaints received regarding such matters, and request that they deal with such

complaints through the complaint handling procedures in the Consumer Protection Code. These types of complaints should be dealt with efficiently, fairly and in early

course. Complaints regarding accounts have increased by 47% on the same period last year. However, on a positive note, they have reduced by 32% on the last two quarter in 2012. This is largely as a result of Ulster Bank successfully resolving the large majority of complaints made against it arising from the “technical glitch” it experienced in 2012.

Investment complaints have increased by 36%. Investment complaints comprise 12% of complaints received overall. Although relatively small in number, in comparison to banking and insurance complaints, they pose their own individual challenges to the office given the complex financial issues involved, the detailed submissions from both parties to the dispute and the necessity in some complaints to hold oral hearings. 1503 Findings were issued in the 1st & 2nd Quarter 2013. The office has always carefully monitored the outcome of Findings as a measure of performance of the complaint handling of providers. Here, the results of the last period are mixed as they show that the Banking sector’s performance in complaint handing compares unfavourably to other sectors. Improvements have been recorded in Investments (4% increase in Findings not upheld) and Insurance (3% increase in Findings not being upheld). Outcomes in Banking remain unchanged from the previous period. 69% of Banking complaints are not upheld – broadly 10% below the level not upheld for other financial sectors. A key challenge for the office in the short term is to identify the drivers of the relatively poorer performance of the Banking sector and engage stakeholders with a view to improving their performance. On a positive note 21% of complaints were settled in the Complainant’s favour by Providers in the 1st & 2nd quarter of 2013. This office encourages efficient, effective and early engagement with consumers regarding their complaints.

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Part 2 : Trend Analysis

2.1 Summary of Trends

1. Overall increase of 27% in Complaints on the 1st & 2nd quarters of 2012 and a 5% increase on the last 2 quarters of 2012.

2. Investment Complaints (including complaints about Pensions and Endowment Policies) have increased by 36% on the last 2 quarters of 2012 from 408 to 556.

3. Banking Complaints decreased by 6% on the last 2 quarters of 2012.

4. The overall amount of Insurance Complaints increased by 7% on the last 2 quarters of 2012.

New Complaints Received 1st and 2nd quarter 2012 & 2013 and Percentage Increase period on period

900

800

700

600

500

Jan Feb March April May June

2012 2013

New Complaints Received 1st & 2nd Qtr 2012-2013

Reporting Period 2012 2013 % increase

January 566 872 54% February 609 828 37% March 563 787 40% April 592 796 33% May 653 775 18% June 699 618 -12% Total 3682 4676 +27%

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2.2 Overall Number of New Complaints Received and Complaints Closed

Chart 1 - Overall Number of New Complaints Received and Complaints Closed

3000 3100 3200 3300 3400 3500 3600 3700 3800 3900 4000 4100 4200 4300 4400 4500 4600 4700 4800 1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013 New Complaints Closed Complaints

Table 1 - Overall Number of New Complaints Received and Complaints Closed

1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013

New Complaints Received 3631 3599 3780 3507 3682 4453 4676

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2.3 Complaints received by Sector for respective periods

Chart 2 - Overall Number of New Complaints Received and Complaints Closed

0 500 1000 1500 2000 2500

Investment Banking Insurance Complaints about Non Financial Service Providers 1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013

Table 2 - Complaint received by Sector for respective periods

1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013 Investment 614 505 496 528 428 408 556 Banking 1147 1232 1403 1277 1283 1799 1695 Insurance 1793 1794 1803 1640 1889 2169 2318

Complaints about Non Financial Services Providers*

77 68 78 62 68 77 107

Total 3631 3599 3780 3507 3668 4453 4676

*Please note that non-Financial Services Provider relates to complaints sent to this office regarding airlines, hired cars, garages, mobile phone companies etc; these Complaints are referred to the relevant body who deals with same.

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2.4 Finding Outcomes for respective periods

Chart 3 - Finding Outcomes for respective periods

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013 Not Upheld Partly Upheld Upheld 75% 25% 16% 17% _14% _17% 17% _16% 8% 12% 12% 11% 9% 8% 76% 71% 74% 72% 74% 76%

Table 3 - Finding Outcomes for respective periods

1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013 Upheld 354 (25%) 88 (8%) 172 (12%) 189 (12%) 173 (11%) 129 (9%) 118 (8%) Partly Upheld 0* 171 (16%) 241 (17%) 226 (14%) 274 (17%) 231 (17%) 238 (16%) Not Upheld 1045 (75%) 785 (76%) 1025 (71%) 1187 (74%) 1165 (72%) 1018 (74%) 1147 (76%) Total 1399 (100%) 1044 (100%) 1438 (100%) 1602 (100%) 1612 (100%) 1378 (100%) 1503 (100%) *In the 3rd Quarter of 2010, this office began to record in its database an additional Finding Category; Partly Upheld. This is where a complaint is upheld but only in part (as provided for in the applicable legislation).

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Finding Outcome by Sector and Compensation Awarded (Investment, Banking & Insurance for respective periods)

Outcome of Investment Findings

Chart 4 - Outcome of Investment Findings 100% 90% 80% 70 60 50 40 30 20 10 0 1st & 2nd

Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011

1st & 2nd Qtr 2012 3rd & 4thQtr 2012 1st & 2ndQtr 2013 Not Upheld Partly Upheld Upheld 73% 27% 17% 24% 19% 23% _17% 14% 9% 10% _7% 9% _5% _4% 74% 66% 74% 68% 78% 82%

Table 4 - Outcome of Investment Findings

Upheld Partly Upheld Not Upheld

1st & 2nd Qtr 2010 148 (27%) 0 392 (73%) 3rd & 4th Qtr 2010 34 (9%) 58 (17%) 260 (74%) 1st & 2nd Qtr 2011 34 (10%) 84 (24%) 239 (66%) 3rd & 4th Qtr 2011 20 (7%) 52 (19%) 203 (74%) 1st & 2nd Qtr 2012 28 (9%) 70 (23%) 211 (68%) 3rd & 4th qtr 2012 13 (5%) 43 (17%) 203 (78%) 1st & 2nd Qtr 2013 10 (4%) 32 (14%) 186 (82%)

Chart 5 - Compensation Awarded - Investment

1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4th Qtr 2012 1st & 2nd Qtr 2013 €146,148 €580,256 €405,893 €614,403 €740,822 €806,282 €731,899

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Outcome of Banking Findings

Chart 6 - Outcome of Banking Findings 100% 90% 80% 70 60 50 40 30 20 10 0 1st & 2nd

Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011

1st & 2nd Qtr 2012 3rd & 4thQtr 2012 1st & 2ndQtr 2013 Not Upheld Partly Upheld Upheld 70% 30% 15% 18% _14% 17% 18% 18% 11% 15% 16% 11% 13% 13% 74% 67% 70% 72% 69% 69%

Table 5 - Outcome of Banking Findings

1st & 2nd Qtr 2010 109 (30%) 0 246 (70%) 3rd & 4th Qtr 2010 28 (11%) 35 (15%) 171 (74%) 1st & 2nd Qtr 2011 64 (15%) 73 (18%) 274 (67%) 3rd & 4th Qtr 2011 77 (16%) 72 (14%) 347 (70%) 1st & 2nd Qtr 2012 45 (11%) 73 (17%) 308 (72%) 3rd & 4th Qtr 2012 63 (13%) 83 (18%) 326 (69%) 1st & 2nd Qtr 2013 61 (13%) 88 (18%) 339 (69%)

Chart 7 - Compensation Awarded - Banking

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Outcome of Insurance Findings

Chart 8 - Outcome of Insurance Findings 100% 90% 80% 70 60 50 40 30 20 10 0 1st & 2nd Qtr 2010 3rd & 4th Qtr 2010 1st & 2nd Qtr 2011 3rd & 4th Qtr 2011 1st & 2nd Qtr 2012 3rd & 4thQtr 2012 1st & 2nd Qtr 2013 Not Upheld Partly Upheld Upheld 80% 20% 13% 13% 12% 15% _16% 15% 6% 11% 11% 11% 8% 6% 81% 76% 77% 74% 76% 79%

Table 6 - Outcome of Insurance Findings

1st & 2nd Qtr 2010 147 (20%) 0 392 (80%) 3rd & 4th Qtr 2010 26 (6%) 54 (13%) 354 (81%) 1st & 2nd Qtr 2011 74 (11%) 84 (13%) 512 (76%) 3rd & 4th Qtr 2011 92 (11%) 102 (12%) 637 (77%) 1st & 2nd Qtr 2012 100 (11%) 131(15%) 646 (74%) 3rd & 4th Qtr 2012 53 (8%) 105 (16%) 489 (76%) 1st & 2nd Qtr 2013 47 (6%) 118 (15%) 622 (79%)

Chart 9 - Compensation Awarded - Insurance

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2.5 Areas of Change

Chart 10 - Areas of Change 1100 1000 900 800 700 600 500 400 300 200 100

Payment Protection Mortgages Accounts Motor

1st & 2nd Qtr 2012 1st & 2nd Qtr 2013

Table 7 - Areas of Change

1st & 2nd Qtr 2012 1st & 2nd Qtr 2013 Percentage Increase/Decrease Payment Protection 410 1027 +150% Mortgages 499 757 +51% Accounts 340 501 +47% Motor 263 199 -24%

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Part 3 - Summary of Complaints

3.1 Summary of Complaints Received and Complaints Closed

Table 8 - Summary of Complaints Received and Complaints Closed 1st & 2nd Quarter 2013

1st & 2nd Qtr 2013

Complaints on Hand 1 Jan 2013 4055*

New Complaints received 4676

Complaints Closed 4387

Complaints on hand 30 June 2013 4344

* Complaints at hand on the 1 January 2013 differ by 94 complaints to the closing figure of the 31 December 2012 due to the re-opening of Complaints closed in 2012 in 6 month period between 1 Jan 2013 – 30 June 2013

3.2 Complaints & Enquiries Received via Telephone and Website

Table 9 - Complaints & Enquires Received

1st & 2nd Qtr 2013

Telephone Queries 11,500

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3.3 Complaints closed Pre-Investigation

Chart 11 - Complaints closed prior to Investigation

Settled

Closed due to no Further Contact Advisory Referrals

Outside Remit of this Office

7% 34%

21%

38%

Table 10 - Reasons Complaints closed prior to Investigation

1st & 2nd Qtr 2013

Settled 590 (21%)

Closed due to no Further Contact 1102 (38%)

Advisory Referrals 198 (7%)

Outside Remit of this office 988 (34%)

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Part 4 - What Complaints were about

(Product Types and Complaint Types)

The Bureau receives complaints covering three broad sectors; Insurance, Banking and Investment. Each sector is divided into two sub categories, one for what products were complained about (e.g. in the Banking sector; Credit Card, Mortgages and Lending Products), and the other for what the complaints themselves relate to.

This Section aims to show what complaints were received by sector (Charts 12), what products were complained about per Sector (charts 13,14,15 ) and what the complaints were about per Sector (charts 16,17,18) and for the 1st & 2nd Quarter 2013

4.1 Overall Complaints Received by Sector

Chart 12 2500 2000 1500 1000 500 0 556 1695 2318 107

Invesment Banking Insurance Complaints against non Financial Service Providers/Outside Remit

Table 11 - Complaints Received by Sector

Sector 1st & 2nd Qtr 2013

Investment 556 12%

Banking 1695 36%

Insurance 2318 50%

Complaints against non Financial Service Providers 107 2%

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4.2 What Products were Complained about Investment, Banking and Insurance

Investment Chart 13 - Investment 500 450 400 350 300 250 200 150 100 50 0 86 26 444 Endownment Policies Pension Investment

Table 12 - What Products were Complained about (Investment)

Product Type 1st & 2nd Qtr 2013

Endowment Policies 26 5%

Pension 86 15%

Investment 444 80%

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Banking Chart 14 - Banking 800 700 600 500 400 300 200 100 0

Accounts ATM Credit

Cards Commercial Foreign Exchange Lending Mortgages ApplicableNot 501 36 166 5 4 212 757 14

Table 13 - What Products were Complained about (Banking)

Accounts 501 30% ATM 36 2% Credit Cards 166 10% Commercial 5 0.5% Foreign Exchange 4 0.5% Lending 212 11% Mortgages 757 45% Not Applicable 14 1% Total 1695 100%

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18 - Financial Services Ombudsman Insurance Chart 15 - Insurance 1200 1000 800 600 400 200 0 Commer cial Critic al/Serious Il lness Household Buildings Income Pr otection/PHI Lif e Medic al Expenses Mortgage Pr otection Payment Pr otection Motor Tr avel Misc ellaneous* Non Applic able 47 49 201 66 262 137 ₁₀₅ 1027 199 125 ₈₅ 15

Table 14 - What Products were Complained about (Insurance)

Commercial 47 2% Critical/Serious Illness 49 2% Household Buildings 201 9% Income Protection/PHI 66 3% Life 262 10% Medical Expenses 137 6% Mortgage Protection 105 5% Payment Protection 1027 44% Motor 199 9% Travel 125 5% Miscellaneous* 85 4% Non Applicable 15 1% Total 2318 100%

*miscellaneous relates to products, including but not limited to, Marine, Farm, Computers, Mobile phones and Pet Insurance where less than 10 complaints were received per percentage figure.

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4.3 What Complaints were about Investment, Banking and Insurance

Investment

Chart 16 - What Complaints were about (Investment)

Maladministration & Customer Care Mis-selling and Misrepresentation Poor Performance of policy/Fees & Charges

344

54

158

Table 15 - What Complaints were about (Investment)

Complaint Type 1st & 2nd Qtr 2013

Maladministration & Customer Care 158 28%

Mis-selling and Misrepresentation 344 62%

Poor Performance of Policy/Fees & Charges 54 10%

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Banking

Chart 17 - What Complaints were about (Banking)

0 50 100 150 200 250 300 350 400

17

Credit Rating ICB

235

Customer Care

35

Direct Debit/Standing Orders

100

Disputed Balances & Transactions

15

Terms and Conditions

81

Fees & Charges

236 Interest Applied 374 Maladministration 70 Mis-selling 29

Opening/ Closing Accounts

19 Overdrafts 104 Refusal 322 Repayment Terms 40 Unauthorised Withdrawals 18 Non Applicable

Table 16 - What Complaints were about (Banking)

Credit Rating ICB 17 1%

Customer Care 235 14%

Direct Debit/Standing Orders 35 2%

Disputed Balances & Transactions 100 6%

Terms and Conditions 15 1%

Fees & Charges 81 5%

Interest Applied 236 14%

Maladministration 374 22%

Mis-selling 70 4%

Opening/ Closing Accounts 29 2%

Overdrafts 19 1% Refusal 104 6% Repayment Terms 322 19% Unauthorised Withdrawals 40 2% Non Applicable 18 1% Total 1695 100%

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Insurance

Chart 18 - What Complaints were about (Insurance)

0 200 400 600 800 1000 1200 194 Claim Handling 85 Customer Care 1116 Mis-selling 132 Maladminstration 72 Policy Review 42 Premium Rates 90 Renewal/Lapse/ Cancellation of Policy

554 Repudiation of Claim/Settlement Amount

14 Surrender Values/Bonus Rates

19 Non Applicable

Table 17 - What Complaints were about (Insurance)

Claim Handling 194 8% Customer Care 85 4% Mis-selling 1116 48% Maladministration 132 6% Policy Review 72 3% Premium Rates 42 2%

Renewal/Lapse/ Cancellation of Policy 90 4%

Repudiation of Claim/Settlement Amount 554 23%

Surrender Values/Bonus Rates 14 1%

Non Applicable 19 1%

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5. Mediation, Finding and Awards

5.1 Summary

This Section intends to examine the Findings Issued by Upheld, Partly Upheld and Not Upheld overall, By Sector and by Product Type.

The total number of complaints dealt with via mediation & investigation in the 1 & 2 Quarter 2013 was 1509. The total amount of compensation awarded, including where rectification is directed by the Ombudsman, during the period from the 1 January to the 30 June 2013 was Banking accounting for €100,827, Investment €146,148 and Insurance €150,620. Total Compensation awarded in the 1 & 2 Quarters of 2013 was €397,595.

5.2 Outcome of Findings and Mediation all Sectors

Chart 19 Upheld Partially Upheld Not Upheld Mediation 76% 0.50% 7.50% 16%

Table 18 -Outcomes of Findings All Sectors

Finding Outcome 1st & 2nd Qtr 2013

Upheld 118 7.5%

Partly Upheld 238 16%

Not Upheld 1147 76%

Mediation 6 0.5%

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Chart 20 100% 90% 80% 70 60 50 40 30 20 10 0 Not Upheld Partly Upheld Upheld

Investment Banking Insurance

82% 14% 4% 18% 15% 13% 6% 69% 79%

Table 19 - Outcome of Findings Issued by Sector

1st & 2nd Qtr 2013

Upheld Partly Upheld Not Upheld Total

Investment 10 32 186 228

Banking 61 88 339 488

Insurance 47 118 622 787

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5.4 Outcome of Findings Issued by Product Type by Sector

Outcome of Findings Issued by Product Type by Sector (Investment)

Chart 21 Not Upheld Partly Upheld Upheld 0 50 100 150 200 Endowment Policy Investment Pension

Table 20 - Outcome of Findings Issued by Product Type by Sector (Investment)

1st & 2nd Qtr 2013

Endowment Policy – – 10 10

Investment 4 29 139 172

Pension 6 3 37 46

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Outcome of Findings Issued by Product Type by Sector (Banking) Chart 22 Not Upheld Partly Upheld Upheld 0 50 100 150 200 250 Accounts ATM Commerical Credit Cards Foreign Exchange Lending Mortgages

Table 21 - Outcome of Findings Issued by Product Type by Sector (Banking)

1st & 2nd Qtr 2013

Accounts 8 20 86 114 ATM 9 2 13 24 Commercial – 2 3 5 Credit Cards 11 14 26 51 Foreign Exchange – – 4 4 Lending 6 15 50 71 Mortgages 27 35 157 219 Total 61 (13%) 88 (18%) 339 (69%) 488 (100%)

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Outcome of Findings Issued by Product Type by Sector (Insurance)

Chart 23 Not Upheld Partly Upheld Upheld 0 50 100 150 200 250 300 Commercial Critical/Serious Illness Farm

Hospital Cash Plan Household Buildings Income Protection/ PHI Life Medical Expenses Mortgage Protection Payment Protection Motor Personal Accident Pet Insurance Travel

Table 22 - Outcome of Findings Issued by Product Type by Sector (Insurance)

1st & 2nd Qtr 2013

Commercial – 1 15 16

Critical/Serious Illness 1 5 21 27

Farm – 2 5 7

Hospital Cash Plan 1 1 – 2

Household Buildings 7 6 74 87

Income Protection/ PHI 3 7 38 48

Life 4 21 89 114 Medical Expenses 5 5 35 45 Mortgage Protection 5 5 29 39 Payment Protection 8 48 204 260 Motor 5 9 36 50 Personal Accident 2 1 5 8 Pet Insurance – 1 1 2 Travel 6 6 70 82 Total 47 (6%) 118 (15%) 622 (79%) 787 (100%)

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Lo-Call 1890 882 090 Telephone (01) 662 0899 Facsimile (01) 662 0890 Email [email protected] Website www.financialombudsman.ie

Part 1 - Executive Summary 4

Financial Services Ombudsman

Bi-Annual Review 2013

Contents