In a submission made to the Senate Standing committees on economics, the FPA said the criteria used by the current external dispute resolution scheme is too broad, and there is “no reason” to expect this to change with the introduction of the Australian Financial Complaints Authority (AFCA).
“This breadth and flexibility provides considerable power to affect competition in financial services markets, given there would be only one external dispute resolution scheme,” the submission said.
The Financial Ombudsman Service provides a good example of this, the submission said, noting the terms of reference for this body make no reference to competition within financial services markets and instead rely solely on legal principles, applicable industry codes, good industry practice and previous relevant decisions of FOS or a predecessor scheme.
“If AFCA adopts an approach to resolving complaints that has disproportionate negative impact on a subset of a market, this has the potential to drive firms out of that market,” the submission said.
“To help deal with this problem, we recommend that s1051A is amended to include a general consideration of ‘the competitiveness and efficiency of financial services markets’.”
Unfortunately, FOS is that bad at doing its job and shows no understanding of procedural fairness that I was relieved to hear of the formation of this new body. Truth be told they could have said Mickey Mouse was now in charge and I would have still seen this as a positive on the status quo.