Seanad Éireann - Volume 156 - 17 June, 1998
Insurance Ombudsman: Statements.
Mr. Cassidy Mr. Cassidy
Mr. Cassidy:I propose ten minutes for spokespersons and eight minutes for other Senators. Senators may share time and the debate will conclude at 6 p.m.
An Cathaoirleach An Cathaoirleach
An Cathaoirleach: Is that agreed? Agreed.
Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy) Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)
Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy): Is onoír dom bheith ar ais arís sa Seanad chun an deis seo a bheith agam eolas cruinn a chur faoi bhráid an tSeanaid. Tá súil agam tar eis an díospóireacht seo go mbeadh tuiscint ag gach éinne ar an gcás casta ataímid ag plé anseo.
As the Seanad may be aware, I gave a detailed outline of the position as regards the Insurance Ombudsman during a Seanad Adjournment debate on 23 April 1998. I also spoke on the matter in the Dáil on 9 June last. On that occasion I pointed out that as the Insurance Ombudsman service is a private sector scheme, it would not be appropriate for me to comment on the resignation of a member of the council or on public statements made by a council member as regards the scheme.
I am concerned, in the interests of the consumer as policyholder, that the Insurance Ombudsman is enabled to discharge the responsibilities of that office in accordance with agreed terms of reference. Before the scheme was launched by the insurance industry in 1992, the views and, indeed, endorsement of the then Minister for Industry and Commerce was sought. As a result of that consultation the terms of reference were expanded to provide a wider ambit of discretion to the Ombudsman in the determination of issues in dispute between policyholders and insurers.
As a device to ensure the independence of the Ombudsman, the operation of the service is divided into three component parts. I will for the benefit of Senators explain again the significance of those components. The first part is a board  comprising executives elected from those insurers taking part in the scheme. The second is a council made up of nominees from within and outside the insurance industry. The council recruits and appoints the Ombudsman subject to the approval of the board.
The third component is the office of the Ombudsman where policyholder disputes are referred and resolved. The member companies of the scheme are bound by the Ombudsman's decisions. As I said before, the record of the present Insurance Ombudsman has set an exceptionally high standard of performance for the Ombudsman service that will ensure its continuation and development into the future. Frankly, it has been a matter of some regret and irony that the office of Insurance Ombudsman now appears to be embroiled in a very public dispute concerning the operation of the office and its interface with the board and council of the Ombudsman. It has been universally recognised that the Insurance Ombudsman scheme has been a glowing and outstanding success as a dispute resolution service. This is a tribute not only to the present incumbent, Ms Paulyn Marrinan Quinn but also to her staff and the operation of the scheme itself, including the co-operation of participating insurers. It has provided an invaluable service to the consumer and has led to improved sales practices and claims handling by insurance companies participating in the scheme.
The cornerstone of the office's success must be rooted in the strict maintenance of its independence. The future direction of the Insurance Ombudsman is largely dependent on the attitude of the insurance industry itself, but not entirely so. My Department and I have been monitoring unfolding developments in this regard since my appointment last October. As I indicated previously, I met the Insurance Ombudsman personally in December and, arising from the matters then discussed, I sought a meeting with the council. At that meeting with the chairman and deputy chairman, I conveyed our concern that the council should be seen to act as an effective buffer between the board, representing the participating insurance companies, and the Ombudsman to ensure the Ombudsman had unfettered autonomy in discharging the responsibilities of this very important office in accordance with the agreed terms of reference. The council representatives assured me they would consider any action required in order to preserve or strengthen this principle and agreed to reflect on particular matters I raised with them. I intend to have further discussions with the council in the coming weeks.
Worldwide and in Ireland itself ombudsman schemes vary from solely private schemes with some form of ministerial approval to full statutory schemes. The important point is that the operation of the Ombudsman scheme, whether industry or publicly funded, must be free from undue influence from whatever quarter. Above all, the office of the Insurance Ombudsman must  be allowed to continue to grow and evolve as a genuinely independent, fair and accessible alternative dispute resolution mechanism.
As I have stated previously, I am satisfied that the Ombudsman scheme is operating in a highly effective manner to the benefit of the consumer as policy-holder. This is due in no small measure to the terms of reference established for the scheme which were strengthened at the behest of the then Minister for Industry and Commerce to enhance the adjudicative discretion of the Ombudsman. It is abundantly clear from the annual reports of the Ombudsman that the Ombudsman has been enabled to operate effectively and judiciously within these terms of reference and, in this regard, the annual reports bear the authoritative stamp of the Ombudsman throughout. They are highly informative to both consumer and insurer and are an effective advertisement in their own right of the benefits of the Ombudsman scheme.
On a previous occasion in this House I wished the Ombudsman every success for the future. On this occasion, I am happy to inform the House that a successor has been selected from the range of candidates who applied for this important position. The successful candidate is Ms Caroline Gill, Chief Executive of the Consumers Association of Ireland. I look forward to a further successful period of insurance dispute resolution under the new Ombudsman's tenure. In the interest of insurance policy-holders and claimants, it would be important that the transition to the new office-holder take place in a constructive atmosphere.
My Department and I will continue to take an active role, in consultation with the insurance industry and the Insurance Council, as and when appropriate, in monitoring the future progress of the scheme. I congratulate Ms Gill on her appointment and wish her every success in this important office. She has been the champion of consumers for many years and I am confident she will continue to be so in her new office which she is due to take up in September.
I want to pay special tribute, as I have on many previous occasions, to the outgoing Ombudsman, Ms Paulyn Marrinan Quinn whose intellectual capacity, boundless energy, commitment and professionalism have ensured the office will be sustained for the future. It is my duty to insist and ensure the insurance industry gives every co-operation to the new incumbent in the interests of Irish consumers and that there will be a smooth transition from the current office-holder to the new one. I wish the scheme, its staff and future clients continued success.
Mr. Coghlan Mr. Coghlan
Mr. Coghlan: Will the Minister have an opportunity to respond to the specific queries raised when statements have concluded?
Mr. Treacy Mr. Treacy
Mr. Treacy: That will not be possible as I am due to speak in the Senator's constituency at seven o'clock.
Mr. Coghlan Mr. Coghlan
 Mr. Coghlan: I welcome the opportunity to make a statement on this important matter of growing public concern. I have no doubt the Minister's various assurances are well intended but I hope they are also well founded, although the jury may still be out on that.
The office of the Insurance Ombudsman was established in 1992 with the approval of the then Minister for Industry and Commerce, Deputy O'Malley, who doubtless believed it would function well in a proper and independent fashion. That is obviously what the current Minister also desires. However, I see the seeds of conflict in the Minister's speech in so far as the council recruits and appoints the Ombudsman, subject to the approval of the board. Therein lies the kernel of the problem. The Minister rightly lays great stress on the good work being done and the independence of the office. However, I believe it is flawed for the council to have a say in the appointment of the Ombudsman.
In spite of the overall success of the office and its contribution to making huge savings for the industry annually, it is far from ideal. The current situation is disgraceful; the core of the problem relates to funding and censorship. This is such an important matter for society as a whole that the Government cannot stand idly by on the sidelines and allow the independence of the office to be eroded. The very title “ombudsman” implies probity and independence. We seem to be witnessing a big, bad mannered bully trying to nobble the office.
Among the eminent Members of this House is the distinguished former Northern Ireland Ombudsman, Senator Maurice Hayes. I look forward to his contribution. I would like to paraphrase a passage in his book Minority Verdict in which he refers to another office-holder and attempt to apply it to the case which is causing such a degree of disquiet here. What does the industry expect from the Ombudsman as watchdog? Does it expect her to roll over on her back and purr like a cat? What would that do to engender confidence in those needing her protection? It would spell the end of the office. Thankfully, Ms Paulyn Marrinan Quinn is not a tame, lame pussycat but is someone who understands the role and necessary independence of the office.
On pages 296-7 of Senator Hayes' book he states:
I also thought it anomalous that the office should rely for legal advice on the government legal service whose members, though excellent in every way, were nevertheless also the people who advised the departments we were dealing with. I therefore decided to appoint as my legal advisers … solicitors with an interest in administrative law and a good track record on human rights. My main concern was to make the office even more accessible and more readily understood.
There are very important principles at stake here and this contemplated travesty must be resisted  and rejected out of hand. On resigning, one member of the Insurance Council, Mr. Bill McLoughlin, wrote that Ms Marrinan Quinn had to resist unrelenting bullying from the moment she took office. The council apparently sought to approve and alter the Ombudsman's annual report and that is absolutely unacceptable. Here we are, a reliable little democracy adhering to the best ethical standards, but the giants of the insurance industry have tried to perpetuate an appalling conflict of interest. Who do they think they are and at what do they think they are playing? This smacks of them wanting a cosy cartel arrangement enshrined in procedure. This attempt at subversion must be firmly put down. The entire scheme would be brought into disrepute if that was allowed to continue. I am delighted the Minister of State met the representatives. However, he did not outline what he said to them and I ask him to provide more details. What the Minister of State did not say is perhaps more important than what he told the House.
It is difficult to comprehend the arrogance of the attempt to censor a quasi-judicial office-holder. Given the problems created over funding, the industry has also impaired the work of the office of the Insurance Ombudsman. The fact that the Insurance Ombudsman had to constantly go with a begging bowl must have interfered with the work of the office and distracted from important cases. I understand the workload is huge and the insurance industry has saved millions of pounds annually as a result of the work of the office.
The Minister of State must ensure that international best practice standards are adhered to and implemented. The Insurance Ombudsman said recently in a statement that the interface between the office and its board and council requires urgent examination. The Minister of State expressed concern about this matter and I ask him to outline more details of the meeting which took place and how matters may develop. It is obvious the Minister of State and his officials are concerned about this issue.
The Insurance Ombudsman stated that only do the structures not meet international best practice standards but some council interventions amount to censorship of the Insurance Ombudsman's capacity to inform the consumer of their rights and how they may be vindicated. The Insurance Ombudsman continued that there is a clear dichotomy between the Ombudsman's obligations to use the annual report of the office as a public interest document and a view intimated by the board/council that it is a marketing tool. If that is true, it is an intolerable position.
The Insurance Ombudsman continued that to censor the Ombudsman or use the annual report as a marketing tool is not only inappropriate but dangerous and it is calculated to reduce public trust and confidence in the Ombudsman's independence. I subscribe to that view and the Minister of State is aware that there is truth in all the recent revelations regarding the interference on the funding front and, more seriously, the  attempts to have an input to and alter or amend the annual report of an independent, quasi-judicial office-holder.
I did not expect it would be necessary to comment on such appalling practices. Thankfully, they were resisted, but the Minister of State and the Government have a serious duty. They are not treating this matter lightly, but we cannot do enough to ensure that best practices operate. Public confidence in all office-holders must be inspired. Everybody has dealings with insurance companies. The last thing we want is to be reduced by the people who should be responsible and know better to something akin to banana republic status. What has happened here is appalling, frightening and shocking. I wish the Minister of State well but he needs to say much more about this matter.
Ms Cox Ms Cox
Ms Cox: I thank the Leader for arranging this debate at such short notice. I also thank the Minister of State for making himself available. He is due in Cork to address a conference on the year 2000 and it is an indication of his commitment that he has gone out of his way to attend this debate.
I fully support the concept of the office of the Insurance Ombudsman. This type of office provides an effective means of redress to aggrieved consumers. It saves an enormous amount of time and money in settling disputes which arise in everyday business interactions. The role of the Insurance Ombudsman is part of a private sector scheme. I read the 1997 report and it appears it has been a reasonably successful scheme. It has dealt with 15,000 complaints since its inception five years ago.
The number of complaints shows there is little doubt that a huge amount of money has been saved by the insurance industry, the State and complainants who would otherwise have brought cases. This is one excellent reason for having the office of the Insurance Ombudsman. However, there are many other reasons. People find the office more accessible. The Insurance Ombudsman stated:
The ombudsman should endeavour to maintain a personal link with the complainant throughout the investigation of the grievance.
The Insurance Ombudsman managed to do so. This action makes people believe that they are being taken seriously. It is most important that this attitude is present when dealing with complainants.
The Insurance Ombudsman's office has another role in directing the consumer to the correct place when the complaint is not within its remit. The Insurance Ombudsman did this sign-posting job well. The relationship between the office of the Insurance Ombudsman and the public is one of trust. In the case of the insurance industry, ordinary people believe the Ombudsman to be their defence, their shining angel,  against the big insurance companies. The Insurance Ombudsman's office has fulfilled this role excellently.
In terms of activity, the office handled 15,000 complaints over five years. In 1997, 810 written disputes were referred to the office; over 70 per cent of these were eligible and 183 cases were issued with written decisions, 61 per cent in favour of companies and 37 per cent in favour of complainants. In the annual report the Insurance Ombudsman noted that she received 141 telephone complaints but having been redirected to the relevant organisation, only 39 callers came back to her. She identified that the word “ombudsman” often can be an effective catalyst in dispute resolution. The Ombudsman's shadow can often focus the mind of company officials dealing with disputes in changing their attitude and mindset to that of a customer based approach. It helps them deal with complaints in a fairer way.
These are laudable reasons for having an Insurance Ombudsman's office. The insurance industry in particular appears to be bedevilled by problems and allegations. However, I am delighted that the industry is regulating itself. In common with Senator Coghlan, I am concerned about the allegations of interference, bullying and lack of funding. As the scheme is voluntary, it is an issue for the industry itself to address. It is not satisfactory to have the office act in a manner which allows it to be a public relations exercise. However, on the basis of the 1997 report, it is not possible to state that the office failed in any of its duties. The current Insurance Ombudsman appears to have been highly successful. She has set a high standard of operation and ethics.
While it is appropriate for the Minister of State and the Government to address areas of concern with the industry, it is not appropriate for the Minister of State to interfere in the day to day operation of a private, self-regulatory scheme. It is not appropriate for the Minister to interfere in the day to day operation of a private, self-regulatory scheme. I commend the approach of the Minister who has worked effectively to address certain concerns and bring them before the council. The issues of funding, staffing and non-interference must be a priority for the insurance industry. It has an obligation to ensure that if no statutory scheme is in place it must operate its own scheme fairly and equitably. There is no doubt that there is enormous benefit to be gained by many sides in the continued and effective operation of this scheme. Both the consumer and the industry benefit and there are great savings in terms of money, time, effort and frustration.
Insurance matters impinge on everybody and the continued operation of an effective office of the Insurance Ombudsman is essential. The office of the Insurance Ombudsman has, because of its success, led to improved sales practices and better complaints handling procedures by insurance companies themselves.
 The Insurance Ombudsman has played a pivotal role in the development and effectiveness of the agency. She is to be admired for her pursuit of justice and equity in the name of the consumer. She has made an outstanding contribution as the first Insurance Ombudsman and, indeed, has set the mark for the future.
The independence of the office of the Insurance Ombudsman must be upheld and I believe it will be. The Government intends to monitor the situation. In his speech, the Minister mentioned that point yet again and said:
The cornerstone of the office's success must be rooted in the strict maintenance of its independence. The future direction of the Insurance Ombudsman is largely dependent on the attitude of the insurance industry itself, but not entirely so. My Department and I have been monitoring unfolding developments in this regard…
We are aware of the absolute necessity for the independence of this office and the Government is making sure that actually happens. The present Insurance Ombudsman, Ms Paulyn Marrinan Quinn, would appear to have done an excellent job. She has set the standard. I am slightly concerned, however, that we should be commenting on what is not a debate the Government has any part in, but one between two or three people within a private business scheme. When people are making comments with regard to the insurance industry they should realise that there are always two sides to every story. I have no intention of setting myself up as a defender of the industry but it is important to realise that there are two sides and suggestions of a cosy cartel do not do any good.
In our own business we have a help desk which we use as a marketing tool for our customers. We do not use the help desk because we have difficulties with what we sell but because we are telling our customers that sometimes we do not get it right. Through the help desk we endeavour to do our best for customers when they contact us. The office of the Insurance Ombudsman should be, and I hope will be, the help desk for the Insurance Federation and the insurance industry.
Mr. Norris Mr. Norris
Mr. Norris: I sincerely hope it is not.
Ms Cox Ms Cox
Ms Cox: The insurance industry is highly lucrative and viciously competitive. It has suffered a reputation for bad practice and sharp manoeuvres. For its own sake it must become more transparent. Where it has chosen to implement a voluntary self-regulatory Ombudsman's scheme it must ensure that the office can do its job effectively and independently. There is no room for bullying or coercion. Its independence must be unimpeachable and must be seen to be so.
The current Insurance Ombudsman has made her mark and set the standard. From that the office must continue to grow and develop, striving  at all times to do its job fairly, correctly and without interference. That is the challenge for the insurance industry, not for the Government.
Mr. Norris Mr. Norris
Mr. Norris: I welcome the Minister of State, Deputy Moffatt to the Chamber. I hope some, at least, of what I say will be passed on to the Minister of State, Deputy Treacy — not because I undervalue the talents of Deputy Moffatt, but because I know that Deputy Treacy has direct responsibility for the insurance industry as well as having a personal interest in this matter.
We have arrived at a most serious situation. I have been looking at the insurance industry for some time and have raised the issue from time to time in the House, on the Order of Business and during debates. As the Acting Chairman, Senator Henry, will remember, some months ago I expressed my concerns to her and indicated I was intending to raise this matter. Senator Henry pointed out that she was a friend of the Insurance Ombudsman and, in fact, that she was Senator Henry's political sponsor. It was appropriate for Senator Henry to raise the matter and I am glad this happened because I have a personal axe to grind. I intend to put on the record some of my concerns as a consumer of the product of the insurance industry, especially in the area of disability and life insurance.
I want to turn to the last report published by the Insurance Ombudsman, Ms Paulyn Marrinan Quinn. I would echo everything that has been said. We have been exceptionally lucky in the calibre of this woman who has discharged her responsibilities with quite exemplary efficiency and to the highest possible standards. She said nothing until her position was made absolutely intolerable by the insurance industry. She remained silent even when one of her senior personnel, Mr. Bill McLoughlin, was forced to resign by the chicanery that was going on in the insurance industry.
Let us be honest. The insurance industry has been consistently attempting to interfere in the independence of the office of the Insurance Ombudsman and to vitiate every principle that underlines the office and its function. Basically, the industry has been caught with its fingers in the jam and it is not enough to give it a slap on the wrist. Many of us feel it is time for the office of the Insurance Ombudsman be taken away from an insurance industry that has shown itself totally incapable and unworthy of operating a voluntary scheme.
We must establish a statutory Insurance Ombudsman. We can no longer tolerate a situation where there is corrupt interference. We have seen that and have evidence of it. Over the past few weeks a distinguished, balanced and responsible person like the Insurance Ombudsman has complained of a whole series of vitiating factors — interference, attempts to influence the report and the withholding of money. She was challenged on this and was able to give facts, figures, dates and sums of money. She was forced into the  embarrassing and humiliating situation where she was called in by the bank. The insurance companies have shown that they are not fit to be trusted with this Office. They have attempted to influence it and starve it of funds.
A number of very interesting things are said in the introduction to the Insurance Ombudsman's report. Ms Marrinan Quinn begins by saying:
Given that the objective of this Private Sector Ombudsman Scheme is to provide an impartial and fair Adjudication of disputes between policy holders and their insurance companies, it is vital that the operation of the Office is perceived as independent in real terms.
That situation no longer obtains due to the misdemeanours of the insurance companies and the council. Ms Marrinan Quinn continues:
In anticipation of the possible denigration of the term “Ombudsman” by the establishment of bogus or sham Ombudsman Schemes, the Association now known as the British and Irish Ombudsman Association (BIOA), with three Irish Ombudsmen as full voting members, set down four fundamental criteria which should be in place before the term “Ombudsman” can be validly applied.
1. Independence from those whom the Ombudsman has the power to investigate
4. Public accountability.
The first one does not continue to exist unimpaired. The independence of the office — I am speaking of the office, not the person — has been impugned by the actions of the insurance companies.
While I do not intend to go into the report in any great detail, on page 24, the Insurance Ombudsman raises a question concerning the issue of jurisdiction. She indicated that a company refused or tried to get out of accepting the operation of her office on the grounds that the insured was insured by a trade union rather than individually. That is another wonderful example of chicanery. Ms Marrinan Quinn stated:
When the case was referred to me, the Company challenged my Jurisdiction and put forward the argument that I could not consider the case because the Complainant was not the policy holder. The Company had, however, already accepted that she had sufficient interest in the policy to claim benefit personally and it had accepted liability in respect of her claim.
I exercised my discretion to accept Jurisdiction in relation to the disability issue. I took the view that the principles of equity ensured that the Complainant should not be deprived of a right of recourse to the Ombudsman in the circumstances.
 Insurance companies will do their damnedest to make sure that a person is deprived of that right and that is why they must be monitored. One may wonder why I speak with such force on this issue. I speak as a consumer. I am on a pension from the University of Dublin under a pension scheme and my behaviour is continually monitored by agents of the insurance company. My right to sit in the Houses of the Oireachtas has been challenged in writing by the insurance company — how dare I have a pension and still perform my duties as a Member of the Oireachtas? I wrote back pointing out that there were disabled Members in every Parliament in Europe. I received letters which began: “We have reason to believe that you have recently travelled abroad, can you acquaint us with your health status?” I have had repeated examinations by doctors of various kinds, including their own specialist. Insurance companies want one to die or get better. They will accept no intermediate state as they have to pay for it. At the end of the day it is a business and they are only interested in business.
I am not the slightest bit interested in the pathetic ideas of help desks. I do not want a help desk, I want fair and decent treatment and an end to threatening letters and blackmail. One of my colleagues in this scheme was recently placed in a similar position. I was upset to receive a letter stating that a claims investigator was being appointed and would visit me at my home. I wrote back immediately stating that I greatly feared that the company had exceeded its powers in inviting someone to my home without making prior arrangements with me. However, if I was given the appropriate information, i.e., the age, colour, sex, sexual orientation, colour of hair and grandmother's maiden name of the person, I would consider extending the appropriate invitation in due time. I took it in a certain spirit and sent the company a good smack on the nose.
I know of another case in which someone who had just completed treatment for a nervous breakdown found one of these letters waiting on the doormat and was promptly sent back into treatment for another breakdown by the threatening tone. This kind of behaviour should be investigated by the Insurance Ombudsman and I can send the correspondence to the Minister of State if he wishes.
I have written to the insurance company concerned which I will not name out of decency and fair play. I stated that if there was any further such correspondence I would report the matter and ask for it to be investigated by the Insurance Ombudsman. I had confidence in the office of the Insurance Ombudsman but I no longer have such confidence. As a consumer, I will never have confidence in that office until and unless it is made fully independent and given every investigative power.
 On the basis of the treatment I have received at the hands of the insurance company, I wonder what kind of little love letter will land on my doormat next week? I am sure it will not refer directly to what I have said in the House but I defy anyone, just as I defied the company when it raised an impertinent question about whether I was fit to serve in this House, simply because I was in receipt of a pension.
Let us confront this issue head on. I raise no imputation against Ms Caroline Gill. I know of her work in the consumer area and she is an excellent person. The great benefit of Paulyn Marrinan Quinn was that she had a legal training and could stand up to these boys. I hope Ms Gill can do the same. I believe she can and do not impute her reputation. However, the Minister of State would make her job 100 times easier if she is given the independence she requires. That independence can only be guaranteed by separating the office from the interference of the insurance industry.
Dr. M. Hayes Dr. M. Hayes
Dr. M. Hayes: I have already been extensively quoted in this debate. I remember having a hand in crafting the last set of criteria referred to by Senator Norris. I am here as a shop steward for superannuated ombudsmen and I speak from that point of view. I am slightly acquainted with Ms Marrinan Quinn. She has had a distinguished period in office as Insurance Ombudsman and has set high standards. She is well thought of by her peers in the Ombudsman's Association.
However, one of the things one learns as an Ombudsman is not to make judgments on issues until one has the facts from both sides. I do not have those facts so I will refrain from commenting too closely on the case at issue. However, these strains nearly always arise when a new post is being set up. There are difficulties of relationships. The first Insurance Ombudsman in the United Kingdom had the same sort of travail. Ms Marrinan Quinn's successor should thank her for bringing up these issues and indicating what is necessary in such a position.
The Minister of State should consider a broader issue linked to the point made by Senator Norris — whether there should not be statutory protection for the use of the name “Ombudsman”. This exists in New Zealand which was the first of the common law jurisdictions to have an Ombudsman. They protected the name and no one but the state Ombudsman can use the term. I would not go that far but people should know what they are getting when they go to the Ombudsman. If the Ombudsman is simply a PRO for or a captive of an industry, or is controlled or a part of that industry's marketing strategy, then the public is being duped. It is being told that there is someone who can protect its interests when that is not the case.
The essential features of an Ombudsman have already been set out by Senator Norris: first, independence; second, tenure — they cannot be dismissed at the whim of people who do not like  their reports; third, public accountability and, fourth, the ability to make reports and adjudications. There is always a difficulty when a functionary such as this is attached to and controlled by an industry. There are two forms of control — appointment and the ability to starve them into submission by withholding resources.
In an odd way there were complaints about this when the first Ombudsman was set up by this House. I remember Mr. Mills having such difficulties. Luckily, mechanisms exist in the public service to sort out that sort of problem. Presumably there needs to be a similar mechanism in the private sector. However, I recommend to the Minister of State the provision of a statutory definition of the term “Ombudsman”. Bodies which do not meet that definition or are not prepared to meet it in ways which are clearly accountable, should not be allowed to use the term.
There is a clear need for regulation of the insurance industry. It may be that this should be achieved through the appointment of a statutory regulator. It does not matter whether one calls them a regulator or an Ombudsman provided they are doing the job. People who are trammelled or prevented from exercising the independence which is the main characteristic of an Ombudsman should not be allowed to call the office that of an Ombudsman. They should be prevented from doing this by the Consumer Protection Act. These people are not real Ombudsmen and should not be allowed to call themselves so.
I have shared some of the experiences of the insurance industry which Senator Norris mentioned. I have an insurance policy which I thought would be worth a great deal but I find it is worth very little. We need this protection because most of the people dealing with insurance companies are vulnerable to high pressure salesmanship, worried about provision for their old age and they are not well informed on these financial and actuarial matters. They can be sold duff policies by insurance companies. More than any other part of the financial services sector, insurance companies need some degree of regulation.
People who deal with insurance need the reassurance and solace that there is an independent person who will take their case without cost or having to go through the courts, and without the hassle associated with taking on a large corporation. That is what the Ombudsman should do and what he or she should be enabled to do. The best way of ensuring that is to provide a statutory framework which defines what an Ombudsman does and indicate the conditions which must be met by companies in securing independence, accountability and resources before they can call their adjudicator an Ombudsman.
This is a broader question than regulating the insurance industry, although it shows up most starkly there. The concept of ombudsman has become well known. There have been distinguished Ombudsmen in this State who have set  markers of fair play and guidelines for the way Departments and others should operate and they have greatly improved public administration and public confidence in that administration. It debases the work they have done if other industries are allowed to set up some sham position which does not do what it promises. We cannot interfere in the private sector but the Government can and should regulate the use of the term “ombudsman”.
Mrs. A. Doyle Mrs. A. Doyle
Mrs. A. Doyle: This is the fourth occasion on which these Houses have discussed this problem yet the facts still need to be put on record. It says something about the Department and the Minister if, on the fourth occasion on which we tried to get the facts onto the record, Members of the Dáil and Seanad have been unable to do so. I am concerned that we are no nearer getting the full facts onto the record. The Minister, for all his delicacy in the statements which he has issued on this matter, stands indicted.
He stated that it has been “universally recognised that the Insurance Ombudsman scheme has been an outstanding success for the dispute resolution service”. I do not question that. He continued, however, that this was not only “a tribute to the present incumbent, Ms Paulyn Marrinan Quinn but also to her staff and the operation of the scheme itself, including the co-operation of participating insurers”. I wonder what the Minister takes the Members of this House and the public to be. He obviously does not accept that Paulyn Marrinan Quinn's statements are true or he could not put that statement on the record. The success to date of the office of the Ombudsman, and Paulyn Marrinan Quinn's personal record in dispute resolution — 1,500 cases in five years — is a compliment to the personal ability and integrity of the holder of the office, despite the constant bullying of the insurance industry. The success is not because of the industry, it is despite it. If the Minister can come into this House today, on the fourth occasion this matter has been put on the record, and still not grasp that fact, there is a major problem with the Department, the Minister and his understanding of what has happened to the office of the Insurance Ombudsman in recent times.
The problem arises with the interface between the Office and the council and board. We do not know why the industry has to exert such control over the Office, we do not know what the industry is afraid of. There are excellent members of the insurance industry who should look at who is representing them on the council and the board. Those representing the mainstream industry are doing the industry no favours with their behaviour, their interference, bullying and attempts to control and censor the annual report of the present Ombudsman. If this Minister really feels this first term of office has been an outstanding success, and I compliment Paulyn Marrinan Quinn for her achievements in spite of what she  has had to put up with, it is not because of the support of the industry, it is despite it. That is the fact we need to place on the record. I urge Minister of State Moffatt — and I hope he will be given time to respond to the points made here or else these statements are futile — to take that point on board and tell us his views and the Department's views on the industry's interference in the integrity and independence of the office of the Insurance Ombudsman. No one is arguing that they did not interfere, withhold money and censor the annual report. We know what they did but we do not know the Minister's and the Government's attitude toward their actions.
I welcome Caroline Gill as the new Insurance Ombudsman. From personal experience I know her to be an extremely able person who will bring excellent skills to this position. I hope before she takes office that she will be in a position to clarify and resolve the relationships between the office of the Insurance Ombudsman and the council and the board. Any continuance of the bullying of and interference with the independence of the office, and of censorship of the work of the office cannot be tolerated. As Senator Maurice Hayes said in his excellent contribution, speaking from great experience in this area, we need to clearly define what we understand to be an Ombudsman. We must look toward statutory definition of the concept of Ombudsman but we must not abuse the concept of Ombudsman by letting the insurance industry control him or her and prevent him or her operating in the interests of consumers of insurance products, the reason for the establishment of the office in the first place. I would like confirmation that there will be a response from the Minister at the end of the debate or there is no point in this.
Why did the council, having originally agreed to renew Ms Marrinan Quinn's contract for a second time then decide at its meeting on 10 July 1997 not to renew the contract from 31 August? Why did Mr. McLaughlin, who has since resigned, and two other industry members who were not at the meeting, provide no reason for overturning the original decision despite repeated requests? What happened coming up to July of last year for the industry members at that particular meeting to refuse to renew Paulyn Marrinan Quinn's contract? We need to know the answers to these questions because, if the industry can control the tenure of an Ombudsman, it can only be assumed that its efforts to hire, fire and control the incumbent has to do with Paulyn Marrinan Quinn's success in looking after consumers of insurance products. Without any other explanation, that is the only logical conclusion to which people can come. If that is the reason, then we should be told because there is something wrong with a system which allows that to continue. If the industry can continue to control the independence, tenure and impartiality of the office of the Insurance Ombudsman, there is something wrong with the  system and we ought to go back to the drawing board and re-examine the legislation.
We need answers to the questions why, at a meeting, the council suddenly changed its mind on renewing Ms Marrinan Quinn's contract and why members of the council absent from the meeting could not obtain an explanation of that change of mind and, to my knowledge, have still not received one. I would like assurances from the Minister of State that he will give answers to these questions in the interest of ensuring the integrity and impartiality of the office and ensuring consumers of insurance products can continue to have confidence in the office and not feel there will be a repeat of the bullying and the use of control techniques exercised by the industry for the past three or four years. There is little point in continuing with the charade unless the existing problems are resolved. To do justice to the excellent work done by Paulyn Marrinan Quinn, despite the council and board of the insurance industry and not because of them as the Minister of State would have us believe, and to ensure the office continues with integrity and impartiality, we need answers to the questions and the problems resolved.
Ms Keogh Ms Keogh
Ms Keogh: I am glad of the opportunity to contribute to these statements on the Insurance Ombudsman. We are all agreed how vital the office is. It is essential there is an impartial and fair adjudication of disputes between policy-holders and their insurance companies and that their is an office to achieve that.
It was interesting that, in referring to the establishment of the post of the Insurance Ombudsman, the Minister of State made the point that, as a result of consultation with the then Minister for Industry and Commerce, Deputy O'Malley, the terms of reference were expanded to provide a wider ambit of discretion to the Ombudsman in the determination of issues and disputes between policy-holders and insurers. This leads me to believe that, despite the fact this was a private sector initiative, there was a certain degree of reluctance within the industry. Perhaps that gives an inkling of the type of mindset within the industry to the position of Ombudsman. Senator Maurice Hayes's remarks were apt in that regard. In the establishment of any such position, there are bound to be difficulties and it can be seen that anyone in the position would need to be strong minded to carry out the duties as efficiently as possible. If the industry thought Paulyn Marrinan Quinn was going to be a pushover, it got it wrong.
As the Ombudsman states in her fifth annual report, it is vital the operation of the office is seen as independent. It is interesting that she also anticipates the possible denigration of the term “ombudsman” by the establishment of bogus or sham ombudsman schemes. That was obviously something which was on her mind from early on. The British and Irish Ombudsman Association set down fundamental criteria which should be met before the term could be validly applied. We  have heard from all sides how successful Paulyn Marrinan Quinn was in office.
At the end of the fifth annual report, there is what could be termed a eulogy from the chairman and chief executive of insurance brokerage congratulating her on her magnificent achievements and stating that they have undoubtedly raised to new and significant heights the public's general perception of the industry. He further states that it will be very difficult for the person who follows in her footsteps to achieve the prominence or success which she has brought to the office. It is very disquieting then to hear of reports of bullying, intimidation and interference and all the more so when we read such accolades. That is why we must unfortunately take such reports seriously, regardless of whether we have a personal knowledge of the individual concerned. It all boils down to asking questions about self-regulation. When it is known that this can be interfered with by the withholding of money or by the industry deciding the tenure of office, the independence of the office must be under threat and that is not good enough.
I found what the Minister of State said to be interesting. He stated that he sought a meeting with the council having met the Insurance Ombudsman. He did not state what went on at the meeting other than that he conveyed her concern that the council be seen to act as an effective buffer between the Ombudsman and the board representing the participating insurance companies to ensure the Ombudsman had unfettered autonomy in discharging the responsibilities of her office in accordance with the agreed terms of reference. He received an assurance from council representatives that they would consider any action which would be required to preserve or strengthen that principle. We are now in the tenure of a new Ombudsman and I wish Ms Caroline Gill all the best in that office. I wonder how she feels considering the publicity surrounding her predecessor's term of office. The situation must at least be monitored by the Minister of State because he has responsibility in this area.
It must be asked whether a statutory scheme which would be independent and which could be funded by a levy on the industry should be initiated. If it is seen that the industry is not prepared to allow the regulator to be independent, other ways of ensuring the independent operation of the Ombudsman must be examined. Confidence in the industry must have been rocked by the Insurance Ombudsman's statements. If she felt there was an attempt to interfere with her work, it calls into question the future role of the office and puts a huge obligation on the incoming Ombudsman to ensure the independence and autonomy of the office are upheld. However, it is undoubtedly very difficult if the person paying the piper is calling the tune.
It is not appropriate that anyone should be able to call the tune as far as the Insurance Ombudsman is concerned. There is no direct role for the Minister of State in what happened because it is  a private sector scheme but it is of such grave importance that, if the Minister of State cannot be satisfied that the independence of the office is upheld, he will have to carefully examine the establishment of a statutory scheme.
Mr. Costello Mr. Costello
Mr. Costello: I am delighted to have the opportunity to contribute on this important issue of the Insurance Ombudsman. The office is extremely important and the concept of providing watchdogs for consumers and making a person responsible for examining products and services, providing information and investigating complaints has been late in arriving in our jurisdiction. Of all the areas in the service industry, the existence of an Ombudsman in the insurance area is probably the most important. This is a product or service which is open to abuse. The nature of the insurance industry is sales which often involves high powered salesmanship. In such circumstances products can easily be sold which do not live up to the projected specifications when they are initially advertised and marketed, often in a propagandist fashion. From that point of view, this industry, of all the financial service institutions, needs to be examined carefully.
The Ombudsman of the insurance industry is a private sector scheme which operates with the goodwill of the industry. That is the nub of this issue. It is a good scheme while it enjoys the goodwill of the industry but if the industry is not prepared to be fair the scheme can easily be undermined. It is a voluntary scheme and, in a way, an attempt at self-regulation at half an arm's length from the industry. The industry is responsible for funding, staffing and the goodwill of the scheme. It will, therefore, be difficult for the scheme to operate if the industry is not in full agreement with the work the Ombudsman is entitled to do.
That is what happened in the case of the previous incumbent of the office, Paulyn Marrinan Quinn. The industry refused to co-operate, became obstructive, bullied and censored and did not provide the resources or the staff for the Ombudsman to carry out her work. That is on record. If that is the case, we must examine the scheme carefully. I am not sure that it is good enough for the Minister of State to blithely inform the House that the future direction of the insurance Ombudsman is largely dependent on the attitude of the insurance industry. It should be dependent on the position taken by legislators who are ultimately responsible for the public and consumer interest. If we accept the Minister of State's statement, the future direction of the insurance Ombudsman will be no better than it was in the past. We will again be confronted by crises caused by obstruction, censorship and the other problems that brought about the untimely resignation of Paulyn Marrinan Quinn.
The Minister of State also blithely informed the House that he has made another appointment to the office. The new Insurance Ombudsman, Ms  Caroline Gill, was chief executive of the Consumers' Association of Ireland and has a considerable track record. However, we cannot simply leave it at that. It is not good enough just to replace the previous incumbent who was effectively forced out of office with another person and consider the matter concluded.
The ad hoc rules and terms of reference which were agreed must be changed. A framework must be put in place whereby the Ombudsman can operate freely, fearlessly and independently. At this point legislation appears to be the only way of doing this. I hope the Minister of State will outline what the Government intends to do because his opening speech gave no indication that it would put in place any measure to protect the office in the future. That is gross negligence. An appalling situation has arisen in which a consumers' watchdog has been directly interfered with by the industry to such an extent that it cannot fulfil its duty. We have an obligation to ensure that the person who is next appointed to that position is enabled to carry out his or her duties in the interests of the consumer.
Support mechanisms must be put in place but that cannot happen unless a statutory framework is established. There is a statutory framework for the Office of the Ombudsman in the public sector; but this voluntary, private sector scheme appears to be flawed with regard to adequate terms of reference. The Minister of State agreed that the previous insurance Ombudsman was successful in that office. Nevertheless, she felt obliged to resign because she was unable to carry out the duties for which she was appointed.
We need a great deal more information about what happened between the board, the council and the Ombudsman. There should be proper disclosure of the circumstances which brought about the resignation of Ms Marrinan Quinn. She made some public statements on the matter but she was obliged to be circumspect to a degree. If legislators are to decide how the Ombudsman will operate in future and whether protective legislative measures are necessary, we must know the facts. The Minister of State has been shy about giving any indication that there is a problem of major consequence in the insurance industry even though the dogs in the street know there is a massive problem of credibility and independence and with regard to the willingness of the industry to support an Ombudsman.
It is the duty of legislators to determine the guiding principles under which an ombudsman should operate, regardless of whether that office operates in the public or private sectors. There should not only be general terms of reference but conditions which must be complied with. If those conditions are adhered to, the ombudsman will be able to carry out his or her work without fear or favour and we can be assured that there is a strong consumer watchdog in a sector which requires it more than any other.
Mr. Mooney Mr. Mooney
 Mr. Mooney: Lest there be misunderstanding of the Minister's role in this matter, Ms Caroline Gill was not appointed by the Minister as Senator Costello asserted. This is not a matter for the Minister of the day, it is a matter for the industry. The insurance industry established the office of Ombudsman, not the Minister or the Government. However, I agree with the Senator that the Government has a role in attempting to discover exactly what has been going on in the murky world of the insurance industry over the last number of years, particularly with regard to the non-renewal of the previous Ombudsman's contract.
Six years ago, in response to a growing chorus of consumer complaints, the insurance industry offered to police its members and practices through the appointment of an Ombudsman on a non-statutory basis. The role of the Ombudsman was severely restricted from the beginning. For example, she could not investigate or arbitrate on complaints against insurance brokers in relation to the misselling of policies or their values. I will return to this point later.
May I read an anecdote quoted in the Sunday Business Post of 15 February 1998, which illustrates the male dominated environment in which Paulyn Marrinan Quinn was appointed. The article refers to the cold February evening in 1992:
… when Paulyn Marrinan Quinn, the newly appointed insurance Ombudsman was invited to attend a dinner of insurance industry representatives in Cork. The atmosphere on such evenings is described by one insurance industry source as “like a stag party”. Of the more than 500 guests in attendance that night, only about five were women and most of them had been corralled off at a separate table. Marrinan Quinn can have been left in no doubt that she was entering a predominantly male preserve. Indeed, many of the “jokes” that were made that night played on the fact that the guest of honour was a woman. Was she, they rhetorically asked as they were quaffing their champagne, an ombudsman, an ombudswoman or an ombudslady? Ho, ho, ho.
That is the environment in which Paulyn Marrinan Quinn took on this important job and perhaps it is worth reflecting on in the light of what happened her five years later. According to the Sunday Business Post, Paulyn Marrinan Quinn, in the grand tradition of Queen Victoria, was not amused.
Acting Chairman (Mr. Costello) Acting Chairman (Mr. Costello)
Acting Chairman (Mr. Costello): So, she was a lady.
Mr. Mooney Mr. Mooney
Mr. Mooney: I agree with the view expressed by Senator Costello that self regulation rarely works because no industry will tolerate having its dirty linen washed in public. I suggest the insurance and pensions industry has a fair bit of dirty linen. A look at the annual reports of the  Insurance Ombudsman of Ireland since 1992 would give that impression.
Allegations have been made in the House and outside that the insurance industry has ganged up on Ms Marrinan Quinn. However, I discovered that the proposal not to appoint her was allegedly put by John Colgan, a former chairman of the Consumers' Association of Ireland. Is it not interesting to see a former chairman of the Consumers' Association of Ireland sitting on the Ombudsman's council which is appointed by the board of the Irish Insurance Federation and which has recently appointed Miss Caroline Gill, at present an employee of the Consumers' Association of Ireland, as Insurance Ombudsman of Ireland? As they say in the best court cases, I rest my case. I understand this proposal was minuted at an Irish Ombudsman's Council meeting and documented in an article headed ‘Ombudsman's row worsens’, in the Sunday Independent on 14 June 1998, by Liz Allen. Mr. Colgan would neither confirm nor deny that he had put the proposal or give any indication why he would have done so and merely said that he did not wish to make any comment.
The roots of the dispute appear to lie in a decision by the council to review the administration of the Ombudsman's office. The consultants reportedly recommended the appointment of an office administrator and the position was advertised by the council. It is suggested that Ms Marrinan Quinn saw the appointment of an office administrator as impinging on her own role. Some good grace may be afforded the Irish Insurance Federation in this regard but when one delves further into the way in which Ms Marrinan Quinn was treated during the years of her appointment other questions are raised.
Those years included some good times. Since establishing the office of the Ombudsman the industry has saved itself £17 million in court costs. The office cost only £1.5 million. This represents a good return on their investment. Over the past five years 53 per cent of the cases referred have related to life assurance and 47 per cent to general insurance. The four main causes of complaint are the repudiation of policy benefits, disputes over surrender values, poor administration of policies and alleged misrepresentation. Of all complaints 70 per cent emanated from the life assurance and investment side of insurance business. Repudiation — where the insurance company declines to pay out on a claim — and surrender values are the most frequent problems. Ms Marrinan Quinn has commented that “surrender values per se are outside my terms of reference”. She went on to point out that “if the problem is the poor performance of a fund, sue God”. Among the major complaints are the poor investment returns and the perception by Irish policy holders that the Irish insurance industry has not been performing well. It is interesting to note that in quite a few cases the investments of insurance companies which are selling unit linked policies, tracker bonds, or products which are insurance  linked have been in the Japanese stock market which we all know has been on a downward spiral for the past two or three years and officially went into recession last week. Yet, the Irish insurance industry persisted in investing Irish investors' money in that market. If that is how they handle their investments, I would have little confidence in their ability to deal with their Ombudsman.
I agree with the idea of statutory regulation. The pensions industry in the United Kingdom missold policies and mistreated the public. We need some form of State regulation, not only in the insurance industry but in the whole area of investment. I am not a supporter of total State intervention but I agree with Senator Costello and others in this regard. That may be where the beginning of the solution to this problem lies.
Dr. Henry Dr. Henry
Dr. Henry: I first raised this issue on 23 April last because I had attended a celebration of the first five years of the Insurance Ombudsman of Ireland some weeks before. On that occasion the Ombudsman seemed in very good spirits as were those of the insurance companies whom I knew and all seemed quite satisfactory. A couple of days later I discovered that Ms Marrinan Quinn had resigned. Presuming that she was moving to bigger and better things I did not query a reason for her resignation. However, when some time later Mr. Bill McLaughlin resigned from the council of the Ombudsman's office I was puzzled. I stress that the Insurance Ombudsman of Ireland did not approach me to raise this issue in the House. I approached her to try to find out what was going on in her office. I wish to make that quite clear because the day after I raised the matter in the House a member of the council of the Ombudsman's office, Mr. John Colgan, telephoned me to ask if I had been put up to raising the question of the Ombudsman and if I had been duped. I was not put up to anything and I do not think I am duped that easily. It annoyed me so much that I wrote to the chairman of the board, Mr. Ernest Margetson, to ask him whether Mr. Colgan telephoned me on his own behalf or on that of the council. I have not yet received a reply. I informed the Minister of State, Deputy Treacy, of this as I thought he might be interested to know how some people approach elected representatives.
The situation in the office became intolerable, and money was an important part of this. As Senator Mooney said, great savings were made in the office. However, there was constant difficulty in obtaining money to run it. There is no better way of curtailing the activities of an organisation than by keeping it short of funds. This shows that he who pays the piper calls the tune. For an office which was having such difficulty in obtaining funding, it had no trouble advertising for a controller at a salary of £25,000 to £30,000 who would not be under the auspices of the Insurance Ombudsman. It must appear to the public that a keeper was being installed in that office.
 The insurance industry wishes to regulate itself. However, following this grave episode, this must be impossible. I support the Senators who said the Ombudsman's office will have to put on a statutory basis. Senator Maurice Hayes spoke about the word “ombudsman”. This powerful word is abused by its common application and there is little control over it. I am delighted that another friend of mine has been appointed as the new Insurance Ombudsman. If Senator Coghlan thought the first Ombudsman was no pussycat, Ms Gill will be more than able to deal with the board and the council.
The dispute has attracted undesirable attention to the office and Ms Marrinan Quinn said it has been badly damaged as a result. The British-Irish Ombudsmans' Association is meeting tomorrow and this matter is on the agenda. It is being taken seriously at an international level. All those who serve in offices such as this guard their integrity and independence carefully and they do not like to see one of their number being treated in such a manner.
I wish the new incumbent well. Her predecessor was treated extraordinarily shabbily. Senators detailed the difficulties people have experienced with the insurance industry — Senator Norris spoke about health insurance, Senator Maurice Hayes about how a policy was not what he expected and Senator Mooney listed various complaints. These are the complaints of ordinary people, not rich corporations. Taking insurance companies to court is an expensive and difficult process. I ask the Minister to take seriously Members' requests to put this office on a statutory basis.
Mr. O'Toole Mr. O'Toole
Mr. O'Toole: I am not an expert on the insurance industry — I have had difficulties with it and I have been involved in many different schemes. However, I have a clear view on self-regulation and how it should work. I regret that I was not here to hear the Minister of State, Deputy Treacy's contribution. There was an extraordinary irony in some of his contribution. He used all the language which is important — he said the Ombudsman should have unfettered autonomy and that the office should be able to operate effectively and judiciously. He went on to say it should be genuinely independent, fair and accessible. These are the standard hallmarks of the office. However, it is unacceptable to even the most casual observer for the Minister to say that the annual reports bear the authoritative stamp of the Ombudsman throughout and to extrapolate from that that the Ombudsman was enabled to operate effectively and judiciously within the terms of reference. I do not accept that the facts, as given by Ms Marrinan Quinn — whom I do not know and have never met — can be reconciled with that statement.
It is not good enough for the Minister to say that he met with the council last December and that he raised issues on which he asked them to reflect. He did not mention that they have yet to  come back to him. He said he will talk to them in a few weeks. That is closing the stable door after the horse has gone.
The Minister does not have to justify the actions of the insurance company. He has no more and no less a stake in this matter than the rest of us. If the Ombudsman's office does not function, it is not an attack on the Minister. However, State Departments seem to have an extraordinary urge to defend matters over which they have no control. If there is a problem, they should say there is a problem. If the Minister asked the board to reflect on a matter last December he should tell us today that they have not come back to him with the outcome but that he knows what has happened in the meantime.
The Ombudsman retired for reasons which worry me. She said there was interference in her carrying out her duties, which is in opposition to the idea of unfettered autonomy. There was an extraordinary and appalling attempt by the council to gain access to the draft report of the Ombudsman before publication so it could modify it. This is questionable in terms of the independent operation of the council and it also undermines public confidence in the scheme. The Minister needs to say this to the council. He should not put himself in the firing line by defending the indefensible. It is either wrong or right. There is no need for the Minister to take the flak.
Senator Norris asked for this matter to be discussed. He did not do this to have a go at the Minister but to hear his view on the matter. The Ombudsman also retired because of the withholding of funds, which is a serious matter. She said the bank manager was unwilling to honour cheques drawn on the normal business of the office. This is a sure method of control. Of the three issues involved, the interference in the running of the office is the least damaging and the withholding of funds — which makes the job impossible — is the worst. The most unacceptable of all is that the council felt it had the right to modify the report of the Ombudsman. If there is to be confidence in the system we, as representatives of consumers, must have a clear understanding that this is the unvarnished report of the Ombudsman.
Those I have heard discussing this issue over the past two months have argued in support of the Ombudsman. People in bars, sitting rooms and at house parties——
Mr. Mooney Mr. Mooney
Mr. Mooney: Or the Horseshoe Bar.
Mr. O'Toole Mr. O'Toole
Mr. O'Toole: Perhaps — I am not a frequenter of that establishment. This is what people are saying when it is mentioned casually and is the residual impression and impact. If the Ombudsman retired for completely innocent and innocuous reasons which had nothing to do with the matters raised, but the residual view given the consumer was that she was hounded, forced or squeezed out of office, then the long-term impact  would be the same. We have lost the confidence of the consumer in the industry and this must be addressed.
I strongly believe in self regulation. It is the best form of regulation and I have argued for it in the House many times. I have also argued for it in finalising negotiations with the Department of Education and Science on a teaching council, a matter which will come before the House in the form of legislation over the next two years. Teachers will regulate their profession. The same thing is being discussed with the department of education in Northern Ireland and at Westminster. We have raised one clear issue, namely, that while the majority membership of such a council should be practitioners of the profession, a significant minority should include people outside the profession representing different interests so that they are in a position to point out and raise issues. A change reflecting this is taking place in the medical board and some of the councils governing the legal profession which are beginning to open up slightly and bring in the odd outsider who is not a practitioner or professional. Much more of this must be done. Such self regulation works. There is a serious attempt by the stock exchange to regulate its own affairs. It is up against a number of smart operators but I trust what it is trying to do.
These are examples of where self regulation works. However, it is patently not working in the insurance industry. The office of the Ombudsman has now lost credibility. The new Ombudsman will have to spend more time restoring credibility than doing the job for which an Ombudsman is appointed. Perhaps this serves the interests of the people who hounded the previous office holder out of office. The only way to deal with this matter is to establish the office on a statutory basis.
Last week in the House the Minister, Deputy Treacy, dealt with legislation relating to protection for investors in various financial services including insurance. The question of bonding was raised. The Bill included provision for a new form of protection and insurance and proposed eliminating the existing system of bonding which agents' representatives and others working for insurance companies are required to have. I made the point that we should not get rid of bonding but allow it continue in parallel with the new form of protection. I argued the toss with the Minister, who informed us that bonding does not work, that we cannot be dependent on it, that it does not cover the level of liability and was not a form of protection. I was appalled to hear this, having being party to the discussion of the legislation when it came before the House in the early 1990s. The Minister made it clear that sharp operators could get around the issue of bonding.
On the basis of these facts, what other Senators have said, our experience of dealing with the industry and the way in which the Ombudsman has been treated, I am beginning to think the insurance industry has a huge job in restoring our confidence. The Government should consider  introducing legislation to establish the office of the Ombudsman on a statutory basis.
Sitting suspended at 5.45 p.m. and resumed at 6 p.m.
Seanad Éireann 156 Insurance Ombudsman: Statements.