Unaccountable FOS in need of urgent review
Allegations of "unsound and unreasonable" findings by the Financial Ombudsman Service (FOS) are behind calls for an "urgent review" of the service.
In a letter to South Australian Senator, David Fawcett, chair of the Parliamentary Joint Committee on Corporations and Financial Services, Russell James Keeling, chairman of the Victims of FOS committee hit out at what he claimed was a flawed ombudsman service that was "accountable to no one" with no avenues for its decisions to be reviewed or appealed.
Keeling accused FOS of protecting "responsible entities to the detriment of investors" and delivering "unreasonable" decisions.
In the letter, Keeling said he was one of 2850 investors who lost $199 million, were "duped into investing in the Becton Office Fund" between 2005 and 2006 by "misleading statements made by the fund manger".
"This case alone is bigger than the Commonwealth Bank of Australia issue," he said.
"FOS found that Becton made misleading statements but has denied us compensation on the ridiculous grounds that, although we had signed an application form stating that we had read and understood the product disclosure statement (PDS), we could not produce contemporaneous note, take while we were reading the PDS.
"Worse still, FOS found that I and other investors, acting reasonably and rationally, would have persisted in purchasing the units of Becton Office Fund for $1 if Becton had disclosed that the units were only worth 50 cents at the time."
Keeling said the ombudsman had determined that investors would have been carried on and not redeemed their investments, even if they had been informed that the gearing of the fund was 90 per cent - and that financial advisers would have advised against redeeming.
"I find these conclusions by FOS ridiculous, unfair and personally insulting," he said.
"There was no foundation in the evidence for these bizarre findings."
Keeling said a review of FOS was "essential" and that if the ombudsman was to retain its position, its terms of reference should be amended.
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