FOS calls for client remediation standards to be applied across industry
The Financial Ombudsman Service (FOS) called for the development of industry wide dispute resolution standards and expressed concern that various customer remediation schemes currently in place may be seen as lacking in consistency and transparency.
FOS made the recommendation as part of a submission commenting on the final report of the Financial System Inquiry (FSI). It stated that while it first commented on the issue in submissions to the FSI recent developments by major financial services providers (FSP) had prompted FOS to examine the issues of FSP driven resolution schemes.
FOS stated that a framework of common dispute resolution standards "should be based on the well-established and accepted framework and existing infrastructure that FOS provides for External Dispute Resolution in the financial sector".
It also stated that while it did not question the efforts of FSPs in their dispute resolution efforts ", FOS is concerned that the current customer remediation programs by individual FSPs will not necessarily be seen by the broader community as sufficient to rebuild confidence and trust in financial services".
FOS said the differing arrangements, approaches, personnel and panels sued to oversee individual FSP reviews also raised questions around consistency, transparency and complexity of these schemes across the financial services sector.
"We consider these issues can best be addressed transparently and cost effectively by leveraging on the current EDR infrastructure developed over the last 20 years, where FOS provides independent and impartial dispute resolution across the financial sector," FOS stated in the submission.
"FOS considers it would be useful for ASIC to establish industry-wide principles and operating guidelines for the implementation of major remediation programs by FSPs, including the independent dispute resolution arrangements. These should build on and be consistent with the current standards set for IDR and EDR for FSPs set out by ASIC in its Regulatory Guides."
While the final report of the FSI was released in December 2014 the Federal Government has called for written submissions from industry stakeholders regarding the final report before making any decisions on its implementation. Those submissions closed on 31 March 2015 with FOS also repeating its call for the establishment of a limited compensation scheme of last resort, either by industry or the government, to fund unpaid FOS determinations.
AUTHOR
Jason Spits
Recommended for you
Multiple industry organisations have shared their thoughts on AFCA’s proposed rules amendment, supporting the idea of firms being named publicly when they fail to comply with determinations.
Channel Capital has appointed a head of investment oversight who joins from 14 years at asset consulting firm JANA Investment Advisers.
Licensee Centrepoint Alliance has completed the acquisition of Brighter Super’s annual review service advice book, via Financial Advice Matters.
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
