The Equality Tribunal
3 Clonmel Street
Dublin 2
Phone: 353-1-4774100
Fax: 353-1-4774141
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Website:www.equalitytribunal.ie
Equal Status Acts, 2000 to 2008
Equality Officer Decision
DEC-S2010-051
Mr James Moriarty
-v-
Rabo Direct
File Ref: ES/2008/206
Date of Issue: 15 November 2010
Keywords: Equal Status Acts 2000-2008 - Disposal of goods and services, Section 3(2)(h), race ground -prima facie case - direct discrimination
Delegation under the Equal Status Acts, 2000 to 2008
This complaint was referred to the Director of the Equality Tribunal on 29 August 2008 under the Equal Status Acts, 2000-2008. In accordance with her powers under Section 75 of the Employment Equality Act, 1998 and under the Equal Status Acts, 2000-2008, the Director delegated the complaint to me, Elaine Cassidy, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part III of the Equal Status Acts, 2000-2008. On 26th April 2010 my investigation commenced. As required by Section 25(1) and as part of my investigation, an oral hearing was held on 3 November 2010 and both parties were in attendance.
1. Dispute
1.1 This dispute concerns a claim by Mr James Moriarty and his wife Ms Lorraine Moriarty that that they were discriminated against by Rabo Direct (hereafter "the respondent") on the grounds of nationality in terms of Sections 3(2)(h) of the Equal Status Acts, 2000-2008 by the bank's refusal to allow Mr Moriarty (as a US citizen) to open a joint online savings account. Ms Lorraine Moriarty was not present at the hearing of the complaint and her husband Mr Moriarty (hereafter "the complainant") confirmed that she was not pursuing her complaint.
2. Summary of the Complainant's Case
2.1 The complainant applied in August 2008 to open a joint savings account with Rabo Direct. During the application process the complainant received a phone call from the respondent stating that they were not able to open an account for him on the basis of his status as a US citizen. Mr Moriarty pointed out that he has dual citizenship and is also an Irish citizen, but this did not change the bank's position. The bank offered to open a single account for the complainant's wife who is an Irish citizen. The complainant believes that it is direct discrimination against him as a dual citizen of Ireland and the United States, because he was prevented from accessing a service which Irish citizens were entitled to access.
2.2 The complainant also states that the restriction which was applied to him was not highlighted on the website and as a result he made two futile attempts to open an account which was frustrating and time-wasting for him.
Summary of the Respondent's Case
3.1 The respondent states that is a low-cost online bank which operates the same simple business model in all the countries where it operates. As part of its offering, customers who have savings accounts may also purchase managed investment funds from a variety of managed fund providers. The respondent states that the majority of the managed fund providers are either US-based or have a significant presence in the US. For this reason, these companies are subject to US law, specifically; in this case, the United States Securities Act 1933. This Act restricts the type of fund which may be sold in the US and/or to all US citizens, regardless of where the citizen may reside. Therefore when the managed fund providers sell international fund products in Ireland or other EU countries, they are prevented by US law from selling them to US citizens. As a result, they make separate product offerings to sell in the US and internationally. The respondent is an agent for these managed fund providers and is subject to a distribution agreement which prevents them from selling the international products to US citizens.
3.2 The company began business in Ireland in 2005 and states that it was at that time a very small operation with a small number of staff and customers. They submit that they were very anxious to ensure their product was available to the maximum number of customers; therefore when the issue about US citizens was first raised, they looked into a number of potential workarounds to the problem. They state they were restricted at that time by the fact that once a customer had opened a savings account with them, the customer automatically had access to purchase managed funds online. Technically they had no way of blocking the savings customer from accessing the managed funds. They explored the idea of allowing US customers to open a savings account and sign an agreement stating that s/he would not purchase any managed investment products. However the suggested workarounds were not acceptable to the managed fund providers. They were not prepared to accept any risk of breaching US law and were only prepared to allow the respondent to sell their managed funds, if they could restrict them to non-US citizens. The respondent submits that this same problem affects all other operators in Europe. As a result, the respondent submits, in September 2006, following extensive internal consultations and advice received from external advisors, they regretfully took the decision to restrict access to their accounts to non-US citizens only. They submit that at that time they updated their website and their internal procedures to reflect this decision.
3.3 In 2008 when the complainant raised the issue with the respondent, they apologised and informed him that they were very sorry to turn down his business, but they simply had no technical solution to the problem at the time; if they allowed him to open a savings account, (which was all he wanted), they would not be able to prevent him from purchasing managed funds. In mid- 2010 the respondent contacted the complainant and advised him that they were working together with some of their international branches (who experienced the same problem regarding US citizens) and they hoped to have a technical solution later in the year. In September of this year, the respondent contacted the complainant and informed him that they now had a solution to the problem and they were able to offer him a savings account which was separate from the other products on offer. The respondents state that the reason they were able to offer the solution now was that they had built up more customers, more income and closer cooperation with their international branches. As a result they were in a position to jointly develop the technology to create a solution.
4. Conclusions of the Equality Officer
4.1 The Equality Officer must first consider whether the existence of a prima facie case has been established by the complainant. Section 38(A) of the Equal Status Acts, 2000 to 2008 sets out the burden of proof which applies in a claim of discrimination. It requires the complainant to establish, in the first instance, facts upon which he/she can rely in asserting that prohibited conduct has occurred in relation to him/her. It is only where such a prima facie case has been established that the onus shifts to the respondent to rebut the inference of discrimination raised. In making my decision, I have taken into account all of the evidence, both written and oral, presented by the parties.
4.2 The complainant raised a number of other issues in his written submission to the Tribunal; however I categorise them as customer service issues, rather than potential issues of discrimination and have therefore not covered them in this decision.
4.3 During the oral hearing, the complainant confirmed that he was specifically concerned with opening a savings account with Rabo Direct and that he was not seeking access to any managed fund products. Therefore I have excluded the issues which arise as a result of the investment fund restrictions imposed by the United States Securities Act 1933. Regarding the savings account, it is agreed between both parties that, despite the respondent's efforts to resolve the problem, the complainant was prevented by the respondent from opening a savings account in July 2008, as a direct result of his status as a citizen of the United States. Therefore the complainant has established a prima facie case of direct discrimination on the grounds of nationality and the respondent has not rebutted it.
5. Decision
5.1 In accordance with section 25 (4) of the Equal Status Acts 2000-2008, I conclude this investigation and issue the following decision. I find that a prima facie case of direct discrimination has been established by the complainant on the grounds of nationality and I find that the respondent has failed to rebut the claim of discrimination. In considering the amount of redress to be awarded, I have taken note of the following factors:
- the respondent clearly did not wish to refuse the complainant's business and had previously made efforts to resolve the situation in order to make their product available to US citizens
- the respondent is an agent for the managed fund providers who established the rule.
- the respondent subsequently did fix the problem and has since made the savings account available to US citizens.
Therefore I award the complainant a sum of €750 as redress for the inconvenience caused.
Elaine Cassidy,
Equality Officer
15 November 2010