In a submission to Cameronralph Navigator’s independent review of FOS, the dealer group – which recently announced it was setting aside $10 million to handle FOS claims made against its advisers – voiced its displeasure with a range of FOS policies and procedures.
While claiming PIS has “an overall positive working relationship with FOS” , John De Zwart, managing director of PIS parent company Centrepoint Alliance, also laid out a number of areas in which the non-aligned financial planning group believes the dispute resolution body of which it is a member could improve.
Among a number of gripes, Mr De Zwart listed FOS’ claim management process – including the scheme’s acceptance of “vexatious claims” – penalty interest procedure and its policies on adviser licensee transfers and risk profiling practices.
In relation to risk profiling, the submission explains that PIS has “on several occasions encountered situations where FOS takes an arbitrary view on how a client’s risk profile should be assessed based on their age … despite support indicating that a client has agreed to a risk profile not in line with the view of FOS at the time the advice was provided”.
While the submission acknowledged the validity of risk profiling guidelines, Mr De Zwart argued they “should not be applied as rigidly as they appear to be by FOS”.
In addition, the submission states that while the “fundamental legal reasoning of FOS in relation to issues around financial advice is sound”, sometimes the body’s legal analysis is lacking.
Specifically, the submission questions FOS’ application of legal reasoning without “consideration of other factors which may be relevant to the dispute”, such as contracts and contemporaneous written evidence.
FOS has operated on the principle of denial of natural justice and the abandonment of common law principles for years.
Not only is their view of the world weird when it comes to risk profiling, their treatment of a failed investment (in terms of segmenting it away from the total portfolio) is just plain wrong.
The entire operation of FOS should have been examined by the regulators a long time ago.
Good on PIS for taking a stand on a process and body that has proven to be biased, inconsistent and has self interests. Let’s hope other major and minor dealergroups grow a pair and do the same so that this whole process is brought under review.
The initial concept of bodies such as FOS was to deal with small claims quickly and efficiently for both consumers and advice providers.
Through lobbying by these groups they are now adjudicating on claims of almost $300k with the ridiculous circumstance that FOS interviews the client who can be selective or deceitful, assists the client with the claim and then calls for evidence , all without the ‘defendant having the write to question the client’s ‘recollection’. FOS then provides a determination with no right of appeal or any reasonable legal avenues to defend a claim.
Upshot is FOS can tell any licensee to pay a claim of up to $280k without any rights to defend it.
This is a seriously corrupted process and needs to be reined in to achieve what it was set up for. Claims of up to $50k. The rest should be dealt with in a court of law.
Risk profiling is plain dangerous the way it currently stands…it ought to be stripped out of the advice process completely, by law. Advice should be objectives based completely with a discussion of the risk to follow, not the other way around. Can’t believe we’re still stuck on the same system that has failed for years, and years to come if we don’t address it.
PIS must remember that they elected to be a member of FOS as an external facilitator of disputes, there are other organisations PIS could have elected to be a member of. You should not bite the hand that you choose to utilise.