THE STATE IS failing to protect people availing of financial services because of boom-time soft touch regulation that “persists to this day” according to a major new consumer report.
The Free Legal Advice Centres says that the State was too focused on the income from property sales during the boom years and it has led to a situation where people are being put at financial risk.
FLAC says their report shows how rules were put in place to favour lenders over consumers by way of confusing regulations.
This approach was encouraged because the State became reliant on stamp duty according to the report:
The State over-emphasised construction both as a source of employment and as source of income in the form of stamp duty on property transactions. Many with unsure capacity to service a mortgage were encouraged to obtain one.
“Many lenders abandoned any pretense at due diligence and lent money with little regard for the borrowers capacity to pay,” it continues.
The report says that the current rules, which FLAC deems to be inadequate, were introduced by way of “European-level developments, piecemeal domestic legislation and selective financial regulation”.
The report’s principal author, Paul Joyce, says that the “balance is currently tilted in favour of the provider” and that the state needs to recognise that a person’s money is at risk when they engage with financial institutions:
“It is important that we recognise that by availing of financial services, consumers take economic risks and contribute to the economic life of society. Therefore our systems should equally safeguard the rights of consumers whilst facilitating the provision of financial services,” he says.
The report also recommends that the Financial Services Ombudsman (FSO) be “independently evaluated” as a result of consumers who used the redress system being “angry and dissatisfied” with the outcome.
In particular, the report calls fro greater transparency within the FSO.
The report, entitled Redressing the Imbalance, can be read in full here >
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