Despite radical structural change at the Financial Ombudsman Service (FOS) being the key recommendation coming out of its independent review, the Australian Securities and Investments Commission (ASIC) did not comment on the issue.
All external dispute resolution schemes (EDRs) must be approved by the corporate regulator, which sets a range of requirements for them to meet. All ASIC-approved EDRs must commission an independent review of their operations and procedures every five years.
This year's review of FOS, which was conducted by CameronRalph Navigator, was the first one since the merger of its predecessor schemes — the Banking and Financial Services Ombudsman, the Financial Industry Complaints Service, the Insurance Ombudsman Scheme, the Insurance Brokers Dispute Facility and the Credit Union Dispute Resolution Centre.
The report found FOS had performed relatively well on a number of fronts, but had identified serious issues with timeliness and efficiency.
According to the report, these issues stem from its current organisational design, which might have worked in the days directly after the global financial crisis, which saw a surge in complaint volumes, an influx of inexperienced staff and the need to ‘unpick' pre-merger differences in approach.
However, FOS needed radical structural change in order to meet the expectations of both consumers and financial services providers.
"Our key conclusion was that the current FOS organisational model has reached the end of its effective life and to meet those expectations, must move to its next stage of evolution," CameronRalph Navigator said.
"However, without substantive structural and process change, further incremental improvements are unlikely to be of the scale that stakeholders expect — nor do we think that incremental change will put FOS on a sustainable footing into the future," the report added.
ASIC has broadly welcomed the independent review and its outcome, praising FOS for its renewed focus on timeliness.
"ASIC welcomes the review's focus on timeliness and its recommendations, and notes FOS's positive response and its intended changes to its processes and structures to address this critical issue," the regulator said.
"ASIC acknowledges the key role played by FOS in determining many thousands of consumer disputes each year. ASIC agrees with the review's findings that while there are improvements that can be made, FOS delivers a critical service, and this review highlights the need to continue to refine and improve that service."
While there was no direct mention of organisational redesign, ASIC said it would liaise with FOS about implementing the review's recommendations.
