Skip to content
Archive

FOS recommendations to further improve consumer outcomes within Australia's EDR and complaints framework

14 October 2016, 15:49 PM

The Financial Ombudsman Service Australia (FOS) has submitted to the government’s review of EDR key recommendations to build on the strengths of the current Ombudsman model based on the principles of fairness, openness, simplicity and adaptability.

“We welcome the opportunity to provide our views to the review panel in the spirit of achieving a full and thorough, positive examination of best practice EDR for Australia,” said FOS Chief Ombudsman Shane Tregillis.

FOS has outlined a series of recommendations to remove duplication, expand the range of disputes able to access EDR, reduce complexity, and improve consumer certainty as part of its submission to the review, chaired by Professor Ian Ramsay.

The FOS submission calls for the retention of the Financial Ombudsman model for dispute resolution which is line with international best practice, with some enhancements. 

“As the Financial Ombudsman we have the binding decision-making powers of a tribunal (based on the contract with our members). This, combined with a strong focus on engagement and outreach as critical elements of the way we work, ensures we remain easy for applicants to use and encourages improvements in industry practice. 

The FOS submission recommends:

  • consolidation of the existing schemes

  • expansion of the Financial Ombudsman’s small business jurisdiction

  • a review of the existing monetary limits for the general consumer jurisdiction

  • enhancing the Financial Ombudsman’s powers

  • a compensation scheme of last resort.

FOS believes these enhancements will strengthen the current EDR framework without the legal complexities and disadvantages of a more formal statutory tribunal.

FOS also considers that the establishment of a consumer-facing helpdesk (online and phone access) triage service would deliver a ‘Band-Aid’ solution to current complexities in EDR that require more effective and sustainable solutions.

FOS Submission: Key Details

FOS’s comprehensive submission to the independent review committee outlines a compelling case to retain and build upon the existing Financial Ombudsman model, widely recognised to be working well for consumers and financial firms within the scope of its current jurisdiction.

However, there is scope to strengthen and improve the current EDR system. Among key recommendations made by FOS to improve the EDR and complaints system overall, are:

  • the merging of the Credit & Investments Ombudsman (CIO) into FOS

  • improving the operating arrangements between FOS and the Superannuation Complaints Tribunal (SCT) including co-location and sharing of back office support functions

  • expansion in the small business jurisdiction based on the outcomes of FOS’scurrent consultation

  • a review of other monetary limits to better reflect current economic realities

  • increase in some powers

  • a compensation scheme of last resort to deal with the issue of unpaid determinations.

Mr Tregillis said it was important to note that FOS currently accounts for 81 per cent of disputes received by the three external dispute resolution bodies (FOS, CIO and the SCT) in the financial sector. 

Of the two ASIC-approved EDR schemes (FOS and CIO), FOS accounts for 87 per cent all disputes received.[1]

“As a body that evolved from a 2008/2009 merger of five industry-based schemes, FOS understands well the principles of structural simplicity, improved operational capacity and the benefits to consumers of greater awareness and access to effective dispute resolution services,” he said.

“Furthermore, as FOS currently deals with an overwhelming majority of disputes in the Australian financial sector, we strongly support a system for dispute resolution guided by the important principle of being fair and being seen to be fair. Hand in hand with fairness is independence – that decisions made within the system are objective and unbiased.

“We are confident that FOS is well-placed to respond to the current challenges and we very much welcome the opportunity to work with the review panel, government, the parliament and all our stakeholders to achieve the common goals of improving consumer redress and industry standards in the financial sector,” he said.

 

Media enquiries
Hannah Hammad, 03 9613 7402 media@fos.org.au

Links
FOS Submission to EDR Review
FOS Submission to EDR Review - Part 2

 

[1] Using 2014-15 data, 39,431 disputes were received across FOS, CIO and SCT. FOS received 80.9% of these. Of the disputes received by FOS and CIO, FOS received 86.8%.