FOS updates industry compo scheme
The Financial Ombudsman Service has renewed its 2009 proposal for an industry-funded compensation scheme as a higher number of retail clients face determinations not being paid by their financial services provider.
In the five years between 1 January 2010 and 31 December 2014, FOS data shows there were 26 financial service providers that were "unwilling or unable" to comply with 120 FOS determinations made in favour of the consumer, according to FOS' most recent report.
"The value of the outstanding amounts awarded by these determinations was $12,686,956.69 plus interest as at 31 December 2014," the report said.
This dollar figure represents 30.07 per cent of the total value awarded by FOS' investments, life insurance and superannuation 'decision makers' and 26 per cent of the total binding decisions made in the space, according to the report.
Since 30 September 2014, the value of unpaid FOS determinations has increased by nearly 4 per cent, said the ombudsman.
"This increase was caused by the liquidation of a single financial advisory firm which could not pay compensation totalling almost $1.8 million, awarded in six determinations," the report said.
FOS has been lobbying for a financial services compensation scheme funded by a levy on Australian financial services licensees since the release of its proposed scheme in 2009.
The original report was prepared for FOS by consulting firm Professional Financial Solutions, and the updated version makes a number of "refinements" to bring it in line with recent submissions by FOS.
The ombudsman has made recent public submissions to the Financial System Inquiry, the Senate inquiry into the performance of ASIC and the joint consumer submission to the Senate Standing Committees on Economics.
The full updated report is available on the FOS website.
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