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New process speeds up dispute timeframes - Annual Review

5 September 2016, 14:00 PM

The Financial Ombudsman Service (FOS) Australia has reduced the average time taken to resolve disputes by more than one-third without compromising the quality of outcomes.

The 2015-16 Annual Review shows that FOS resolved disputes in an average of 62 days compared with 95 days in 2014-15. It also closed 43% of disputes within 30 days (almost double last year’s 22%).

The improvements were due to FOS’s new dispute process, which was introduced on 1 July 2015 in response to the independent review of FOS conducted in 2013.

FOS fairly and independently resolves disputes between consumers and member financial services providers (FSPs).

The Annual Review shows that in 2015-16, FOS received 34,095 disputes, up 7% on the previous year. This was mainly due to a 19% increase in general insurance disputes received.

Financial difficulty disputes continue to decline
Financial difficulty disputes, which occur when a consumer is unexpectedly unable to meet their payment obligations, fell again in 2015-16.

Chief Ombudsman Mr Shane Tregillis said this was due to improvements that FSPs are continuing to make in managing disputes when people are in financial difficulty, and consistently low interest rates, which had reduced repayment pressures for many borrowers, together with improvements to the FOS process.

“Before the changes, these disputes may have progressed directly to FOS,” he said. “Under the new process, all financial difficulty disputes lodged are now initially referred to the FSP to provide another opportunity for the parties to resolve their dispute.”

Systemic issues a key priority
FOS identified and referred 129 possible systemic issues (that may have an effect on people beyond the parties to a dispute) to FSPs for response, compared with 173 last year. A total of 64 definite systemic issues were resolved this year.

“FOS continues to have a strong focus on the identification and resolution of systemic issues with our member FSPs,” Mr Tregillis said.

What the disputes were about
FOS accepted 20,298 disputes in 2015-16. Of these, there were:

  • 10,438 credit disputes (47%)
  • 6,858 general insurance disputes (31%)
  • 1,546 deposit-taking disputes (7%)
  • 1,163 payment system disputes (5%)
  • 1,141 investments and advice disputes (5%)
  • 1,095 life insurance disputes (5%)

Notes

  1. The totals above are based on counting disputes that may involve multiple products/issues as single cases
  2. Due to the changes we have made to our dispute resolution process, the number of disputes we accepted in 2015-16 cannot be directly compared with disputes accepted in previous years.

Of the credit disputes, one-third (32%) involved credit cards and one-quarter involved home loans. The main issues in dispute were FSPs declining requests for financial difficulty (14%) and consumer credit reporting (13%). Some 9,858 disputes (or 44% of all disputes FOS accepted) involved banks. This was a slightly lower proportion than in 2014-15. Disputes involving banks were mainly about financial difficulty (24%) or FSP decision (21%).

Of the general insurance disputes, one-third (32%) involved motor vehicle – comprehensive insurance and one-quarter (24%) involved home building insurance. The main issues were denial of claim (20%) and claim amount (19%).

Of the deposit-taking disputes, 61% involved personal transaction accounts and the main issue was unauthorised transactions (23%). Of the payment system disputes, 28% involved non-cash systems and the main issue was unauthorised transactions (14%).

Of the investments and advice disputes, 22% involved mixed asset funds (investing in multiple asset classes such as cash, bonds, shares and property), and the main issue was inappropriate advice. In life insurance, almost half (49%) the disputes involved income protection insurance, and the main issue was denial of claim (26%).

External dispute resolution and small business review
FOS is engaging with stakeholders as part of our work with the independent panel reviewing external dispute resolution and on the possible expansion of our small business jurisdiction. These are important developments in the sector, highlighting the role that external dispute resolution plays in ensuring fair outcomes and supporting trust in financial services.

We are committed to the principles of fair, open and simple resolution of financial disputes. Reducing complexity for consumers in accessing effective independent dispute resolution has our strong support.
 

Links
FOS Annual Review 2015-16
FOS Annual Review 2015-16 snapshot

Media contact
Hannah Hammad
Senior Manager Community & Corporate Communications (Acting)
Community & Corporate Communications
Financial Ombudsman Service Australia
+61 3 9613 7402 or email [email protected]