The institutions are driving the push to a single external dispute resolution (EDR) scheme. It should only apply to them.
This whole Kelly O’Dwyer-sanctioned big-end-of-town-deal for one ombudsman for financial services is simply appalling.
The lack of evidence for considered issues very much suggests that the outcome of establishing the Australian Financial Complaints Authority (AFCA) was predetermined to achieve somebody's desired result without any balancing of other consequent outcomes.
The current system is wrong in that it has no disincentive for litigious parties to not promote spurious action to achieve compromise windfalls as nuisance actions. We are all aware that a large number of matters are brought because particular claimants see some easy money with no financial or legal risk if they fail.
We are also aware that the big end of town accepts complaints as a necessary evil. Those parties see the goal as how to deal with complaints quickly and cheaply. The nirvana of not having complaints, and/or paying appropriate compensation where deserved, is simply not on the agenda of politicians and institutional managers. The parties in institutions and government are driving this outcome because it gives them more certainty as to KPI's, less media attention and they have the resources to run over everyone else.
"Team" politics means that individual local members and senators won't break ranks to contest what is a blatant decision to benefit institutions and make an ineffective minister look like she is actually doing something.
An ombudsman system is in place to provide for genuine consumer assistance where a valid dispute exists but the damaged person doesn't have the wherewithal to defend themselves. The flaws in the current system relate to a lack of checks and balances as to spurious claims as well as the lack of recovery where the AFSL is financially unable to fund a settlement. The new proposed system won't deal with either of these issues.
The minister doesn't care and doesn't want to know.
If the minister was even half genuine, then the new proposal that is totally designed by the institutions should be limited to them and anyone else who wanted to opt-in. Separate to that, the much discussed checks and balances to the old system should be introduced and not ignored.
A separate, but currently little discussed, issue is the appropriate cap on claims that are in the jurisdiction of the ombudsman mandate. Any experienced person will tell you that there is an awful lot of litigious lawyers around who will work on a no-win, no-fee basis for claims over $100,000.
Therefore the ongoing argument about needing to increase the cap in order to provide access to consumers who have incurred a loss is simply a misrepresentation. Increasing the cap is all about allowing the ombudsman, a largely commercial enterprise that just happens to direct all profits to its employees, to be involved in more matters and allow them to market themselves to institutions as a cheaper form of dispute resolution.
ifa should keep up the publicity on this issue as no one else seems to want to.
Michael Pinn is the managing director of boutique AFSL Pinn Deavin
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 24 May 2018Suncorp Advice enters deal with MidwinterBy Reporter
- 24 May 2018ANZ dealer group boss jumps ship to Aus UnityBy Reporter
- 24 May 2018Elder abuse may stem from additional SMSF membersBy Miranda Brownlee
- 23 May 2018Trail commissions ban would create ‘bigger conflict’, says licenseeBy Killian Plastow
- 23 May 2018‘Shut it down’: CPA members rail against troubled advice armBy Aleks Vickovich and Jotham Lian
- 23 May 2018Labor heavyweight concedes industry fund hypocrisyBy Aleks Vickovich and Jessica Yun
- view all