The proposition to merge the Financial Services Ombudsman Services Australia (“FOS”), the Credit & Investments Ombudsman (“CIO”), and the Superannuation Complaints Tribunal (“SCT”) is quietly causing concern in the industry as a potential solution being put forward by the Australian Government for a more ‘effective avenue for resolving disputes’. This would create a ‘one-stop mega external dispute resolution and complaints system’.
In April 2016, the Australian Government commenced a review of the external dispute resolution (EDR) schemes in the Australian financial system with the aim of examining the effectiveness of the way consumer disputes and complaints are handled. Headed by Professor Ian Ramsay, the independent expert review panel released an issue paper in September 2016 seeking information from interested stakeholders.
In the FOS’s submission released in October 2016, FOS clearly states its position that a key enhancement to address the current gaps and overlaps in the current resolution schemes would be the merger of CIO and FOS. Through identifying a series of opportunities for further improvement of the dispute resolution system, FOS states that a very large portion of the opportunities could be turned into reality by the merger of CIO and FOS, creating one industry Ombudsman scheme. FOS re-emphasises its position as well as ASIC’s position, being that competition between different schemes may not be productive in enhancing consumer outcomes.
The merger of CIO and FOS is also supported by the Chief Executive Officer of Consumer Action Law Centre (“CALC”), Gerard Brody, who considers that the merger would reduce the barrier for consumers to lodge claims. The merger of these two or even three entities, would also allow the sharing of insights into the trends in the industry.
However, this push has also received objections from various stakeholders, including the Chief Executive Officer of CIO, Ray Venga, who considered the merger to be ‘superficially appealing but simplistic’, given a massive overhaul is needed to improve the overall efficiency of the two schemes. Mr Venga also opposes the idea that competition between the two schemes is not productive. He argued that a healthy sense of competition would push FOS and CIO to beat their performance benchmarks and allow stronger consumer protection.
The final report from the independent panel to the government is expected to be released on 31 March 2017. Sophie Grace will keep you updated with any developments or changes in this space.
If you have any questions about the external dispute resolution review, please contact us.
Melody assists in preparing, reviewing and negotiating legal documentation for participants in the financial services industry. Melody also assists with developing, reviewing and amending compliance documentation. She also supports the Compliance Consultants with the preparation of AFSL and ACL applications, variations and compliance reviews. Melody provides ongoing legal support and also assists in implementing ongoing compliance support, updating procedural documentation and preparing compliance reporting for Compliance Committees and Boards of Directors.