The Financial Ombudsman Service (FOS) is fighting accusations that it is biased and untrustworthy after one submission to a Senate committee last year raised questions about the organisation's conduct.
The submission by Dispute Assist – a company which represents consumers disputing financial services providers – accuses FOS of having an agenda to "get rid of complaints" and deny applicants "natural justice".
The company provides several examples of cases which it claims represent evidence of FOS staff misrepresenting the facts, incorrectly interpreting its terms of reference, and pressuring applicants to accept inappropriate settlements.
Two of the cases involve allegedly bad financial advice. Another describes an incident where an FOS representative had filed notes of a telephone conversation that were purportedly inconsistent with the recording.
"The Ombudsman's file notes do not remotely resemble the facts they purport to represent," the submission stated.
"This leads one to seriously question the Ombudsman's conduct, whether [the rep] is a fit and proper person to hold the position of Financial Ombudsman and most importantly whether the public can trust the FOS."
Dispute Assist believes the reason for FOS' supposed behaviour is a lack of resources. It references a 2013 report by Cameronralph Navigator (CRN), which highlights an issue of "significant backlog" within FOS.
"The CRN report reveals that FOS is seriously overloaded. There are serious concerns regarding FOS's backlog of disputes. [It] points out the volume of incoming disputes continues to defy projections and that FOS has insufficient capacity to deal with large dispute volumes," Dispute Assist wrote.
"Clearly the FOS has problems coping with the backlog it has and could not cope with the current financial advice scandal that just keeps growing."
In responses to the submission, with the latest issued in November 2015, the FOS rejects these allegations.
"We do not consider the various assertions about FOS's decision-making and the performance of its role to be valid. The Dispute Assist submission does not accurately reflect the current operations of FOS," the response stated.
"Many of the issues raised have already been subject to review in public committees or inquiries.
"Recent findings by the Financial Services Inquiry (FSI), the Senate Committee Inquiry into the Performance of ASIC, and the FOS Independent Review, confirmed the important role that FOS plays in providing consumer redress, concluded that EDR is working well and noted that the role we play is well supported by industry and consumer organisations."
The response also rejected claims that the FOS was overloaded, saying it had resolved the issue of backlogs since the 2013 CRN report.
"FOS has eliminated its backlog at all stages of the dispute process; and introduced a new streamlined dispute process which will deliver a simpler, quicker process, and improved experience for both FSPs and applicants," the statement said.
"FOS has the appropriate capacity, resources and processes to deal with consumer disputes in the financial services industry in a fair and impartial manner, consistent with the principles set out in the FOS Terms of Reference (TOR)."
A spokesperson for Senator Sam Dastyari told ifa that the committee was aware of the allegations, and that Senator Nick Xenophon had placed questions on notice.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 20 Sep 2018Independent advice will prosper but must be paid for: LovedayBy James Mitchell
- 21 Sep 2018Former ASFA policy advisor to boost FPA ranksBy Reporter
- 21 Sep 2018Aligned advisers in search of freedomBy Adrian Flores
- 20 Sep 2018Banned Perth adviser did not engage in dishonest conductBy James Mitchell
- 20 Sep 2018‘No advisers have been mistreated’: DalyBy James Mitchell
- 20 Sep 2018Beacon advisers held ‘ransom’ while IIOF money remains missingBy James Mitchell
- view all