According to a report, titled Review of the financial system external dispute resolution and complaints framework, the independent panel has found that while Australia’s industry ombudsman schemes are generally working well, significant areas need reform.
One of these includes the need for FOS and the Credit and Investments Ombudsman (CIO) to be subject to more frequent independent reviews.
The panel also recommends that each scheme establish an independent assessor whose role would be to investigate complaints by users, including clients and financial advice firms.
“The independent assessor’s role would not involve reviewing the findings or outcomes of the relevant decision,” the report states.
“The assessor would make a recommendation in relation to the service handling of the dispute which, where the dispute was not handled satisfactorily, may include that the scheme makes an apology or provides compensation to the affected user.”
The panel also recommends that there be a single industry ombudsman scheme for financial credit and investment disputes to replace FOS and CIO.
This will allow for a focus on providing “low cost, fair and accessible dispute resolution, the ability to innovate and adapt to changes in the regulatory and broader socio-economic environment, and … on improving industry behaviour — while addressing the problems that arise where the framework consists of multiple schemes with overlapping jurisdictions”, the report states.
This recommendation is different from the one in a report by the House of Representatives Standing Committee on Economics, which called for the establishment of a banking and financial sector tribunal by 1 July 2017.
The panel further recommended lifting monetary limits and compensation caps for consumers and small business as well as developing a superannuation code of practice.
Finally, there needs to be increased ASIC oversight of the industry ombudsman schemes and a requirement for debt management firms to be a member of a scheme.
“ASIC’s oversight powers in relation to industry ombudsman schemes should be enhanced by providing ASIC with more specific powers to allow it to compel performance where the schemes do not comply with benchmarks,” the report states.
“The absence of a requirement for debt management firms to be a member of an EDR scheme represents a gap in the framework (for consumers of services these firms provide) and hampers the effectiveness of the industry ombudsman schemes.”
This is basically balanced reporting on FOS. Well done IFA.
I am a victim of the CBA scandall as well.The CBA removed documents from my client file during the FOS process.The FOS stated I should have asked for a PDS to the Investments and I should have asked for a SOA???. are these not the obligations of the adviser furthermore the adviser falsified documents to cover his tracks which I found to be consistent with 2 other clients record of events.In response to the last 2 comments the FOS is only biased against the small end of town financial companies but will support the CBA at the detriment of the client.I should have seen an independent adviser rather than Whittaker Mcnaught who just happens to be a susidiary of the CBA.
Is anyone bothered by the proposed scrapping of that other scheme, COSL/CIO?
Nope. They have no relevance or weight in investment/advice space. Looking at some of their fin advice member firms, it actually supports this Panel’s view that dodgy firms who have had cases go against them at FOS can just up stumps and run away to another body – cant do that from a court or from a regulator, why should you have the choice to do it for a complaints body?
“A judge can’t have any preferred outcome in any particular case. The judge’s only obligation – and it’s a solemn obligation – is to the rule of law.”
Samuel Alito
yeh, except FOS they are NOT bound by rule of law.
Too bad FOS generate false and misleading records to make consumers loose disputes. FOS is basically corrupted and needs to be shut down. FOS decision makers are utterly unalike to judicial decision makers. FOS is beyond contemplation of what it is to be a judge.
The crux of the matter is there are no rights for an adviser subject to vexatious claims. He is forced to employ lawyers ( because of the terms of PI insurance ) to counter the claims , which is an expense without compensation where he is the innocent party. FOS seems to adopt guilty until proven innocent in respect of claims lodged against an adviser and there are no factual analysis of data. Once a claim is proven wrong FOS will allow the complainant to change the grounds continually and it would seem without end letting the costs mount up for the adviser. The system needs greater checks and balances in it. It is skewed too far in favour of the complainant.
Yep that’s exactly my case as described below that lead to this whole FOS review and unfortunately nothing has really changed to protect the adviser.
The small adviser basically has no redress and the consumers do not either. They are one and the same. The FOS decision makers sometimes get special interest rates from lenders while they basically find in favor of the big lenders. Meanwhile, the sole trader or small time advisers and brokers get disciplined unfairly and the consumers are fleeced while the veggie growing hypocrite bankers laugh about it all.
Yes I agree and support the small town financial advisers.I do not work in the industry but merely an observer and victim of a failure of a big bank advisory services. Upon my further investigations was a family ,one with the CBA aged 90 who was subjected to high risk investments and another in her 30s who was also subjected to high risk investments.within a small advisory firm both going to the FOS .guess which one was not entitled to compensation by the FOS yes the cba investor who is 90.funny how the cba has a member on the board of this independent organisation and is happy to screw over all small business rather than the big boys.
Having been the unlucky adviser to be on the end of FOS’s incompetence that led to this review, with the most vexatious claim thrown out by FOS several times, only for them to pander to a “professional” individual litigant who has sued and abused similar systems previously.
FOS allowed the case to be reopened multiple times on additional complaint factors, all with zero evidence. The complainant figured the more mud they could throw, with zero risk of costs to themselves, then hopefully eventually something would stick. And it eventually did, with the claimant finally getting 1/4 of what the tried to claim, in a disgustingly confused and academic decision that simply didn’t make sense in the real world of advice.
I was even personally called to apologise for FOS’s complete incompetence in handling the matter and that the case meant FOS would completely review their entire processes.
Regardless of the ombudsman making contradicting decisions, there is ZERO right of reply from the adviser to challenge a final decision and process that FOS has admitted was appalling.
Having 1 complaint and thus 1 claim in 18 years of advice and to be put through this incompetent kangaroo court is an injustice to any normal legal procedure. But of course as an adviser there is not a thing we can do. And even (as reported above) if we can complain and FOS are found in the wrong, nothing will be done to fix the wrong FOS decisions.
The adviser not only gets to waste $10’s of thousands of dollars in protracted, tried on complaints, we then get killed by increased PI premiums for years after that means we effectively pay the compensation anyhow ourselves, thus effectively forcefully being self insured via significant PI premium increases.
FOS, I respect that there is a need for your services but wow it’s a crazy system to be accused and abused in your quasi legal world with zero natural justice protection.
Same, I had a vexatious complaint by a client, and after having it dismissed by FOS on three attempts they then went to panel (at the behest of their new scavenger ambulance chasing adviser), who overturned all 3 prior rulings and awarded compensation. Out of the 72 paragraph ruling I counted 39 that were blatantly wrong, inaccurate or utterly misinterpreted and yet had no right of reply. And no surprise, am not part of a large institutional AFSL. How is this just, fair or equitable?
I totally Agree and it should be noted that The ASIC are also guilty of this Authoritarian Lefty progression allowed by the Lefty Politicians who insulate themselves from all and any accountability ………..if you win an action instigated by the ASIC they never admit they were wrong and you can never recover any legal costs and they ensure that any allegation hangs over your head without full clearance as an intimidation weapon.
I totally agree that FOS needs an independent assessor. Better still make FOS abide by evidence based investigations, because at the moment decisions can be purely based on the individual case managers own interpretations of the clients story, without supplying any paper based evidence, how is this fair!? “The panel further recommended lifting monetary limits and compensation caps for consumers and small business…’ I do not agree to this. FOS in the beginning was a small claims tribunal… how can $500,000 be a small claim? and to top it off FOS [u]at their discretion[/u] and turn 1 claim into 2 from one client. and to have no court right of reply to a FOS decision takes away the right to a fair hearing… how is that fair?!
Well actually the average home is at least $500k should we exclude most people and above from consumer redress?
I do agree FOS need an independent assessor. It is disguesting how unaccounablt they are
Too right there should be. Advice is so complex now, and advice documents so long, that it’s not possible for FOS to be across everything.