A large but relatively unfamiliar external dispute resolution (EDR) scheme has emerged as a competitor to the Financial Ombudsman Service (FOS).
The Credit Ombudsman Service Limited (COSL) has for some years been able to deal with financial advice and investment related matters, but has, somewhat inadvertently, been flying under the radar.
While COSL has in the past been considered the EDR scheme for the mortgage broking industry, financial advisory and investment groups appear to be taking notice of the scheme, and it’s a trend COSL is working to encourage.
COSL head of operations and corporate affairs, Mark Wesker, said the dissemination of misinformation had been at the root of the advice and investment industry’s relative ignorance of COSL’s existence. For example, Wesker said some at the Australian Securities and Investments Commission (ASIC) had not been aware COSL was a viable option for the industry.
“The senior levels of ASIC were aware, but it appeared the junior levels of ASIC thought that the [Financial Industry Complaints Services], now FOS, was the only scheme that could handle these complaints. And it appears that was the advice they providing even when people were renewing and nominating COSL as their EDR scheme,” Wesker said.
“We got that fixed up about three months ago.”
Wesker said the Financial Planning Association (FPA) had also been spreading the wrong information, but suggests it was simply the result of the correct information slipping through the cracks.
The recently introduced national consumer credit regime has also helped to raise COSL’s profile. Many financial advice firms have now registered for credit licenses, and in that space COSL is promoted heavily alongside FOS. Wesker said the FPA points to FOS as the scheme of choice for its members, while the Mortgage and Finance Association of Australia, for example, lists COSL as its scheme of choice.
Many financial services licensees may simply be encouraged to know there is choice. Wesker said COSL’s memberships and complaint resolution costs are “significantly lower” than FOS’s, “particularly for smaller operators”.
“We have more members than FOS and fortunately we’re still a smaller, more nimble organisation than what FOS is now.”
Wesker said the similarities in the schemes lie in the way they process complaints, with EDR schemes increasingly being instructed by ASIC on how they must handle cases. Wesker said COSL’s dispute turnaround times were also “on par with FOS, but both schemes are always working hard to reduce those time frames”.
“The reality is, the way the schemes will handle the disputes is all but identical,” Wesker said.
The important distinction may be in the communication and member relations methods employed by COSL compared to FOS, with some financial services licensees expressing frustration over FOS’s style.
Wesker said while COSL “may very well make the same rulings” as FOS, he hoped COSL could offer a better relationship with members.
“Hopefully we can develop a better relationship, and where problems arise we can keep the communication channels open to ensure everyone can understand why certain decisions have been made or why certain processes need to be followed.”
