FOS rejects lawyers’ calls on jurisdictional limits
The Financial Ombudsman Service (FOS) has taken serious issue with claims made by two lawyers that its monetary jurisdiction should be limited to $50,000 and has denied assertions that it splits complaints, effectively allowing it to hear complaints well above its current $280,000 jurisdictional limit.
In a letter to Money Management, FOS chief ombudsman, Shane Tregellis said he did not believe the comments made by the lawyers — Heidi Nash-Smith and Jack Geng of Wotton and Kearney and published in Money Managenment - to be balanced and fair or evidence-based.
"The articles ignore the trend in recent consumer submissions and Parliamentary Committee Reports for FOS's jurisdictional limits and compensation caps to be increased," his letter said. "For example, the recent report of the Senate Economics References Committee's inquiry into the performance of the Australian Securities and Investments Commission (ASIC) called for the indexing of the current $500,000 limit and $280,000 compensation cap."
However he noted that, based on feedback from FOS's recent consultation on proposed changes to its Terms of Reference, it was not planning to implement any such increases in its monetary limits.
Tregellis also denied the claim that FOS splits complaints so it can consider matters in excess of its monetary limits.
"FOS does not split claims. We handle multiple claims (each subject to the compensation cap) within a single dispute, as we are required to do by law and ASIC's Regulatory Guide 139. This is done for administrative ease and to limit costs for financial services providers. FOS's approach to the law was endorsed in the April 2013 decision of the Federal Court in Wealthsure Pty Ltd v FOS," he said.
"The articles imply that FOS's obligation to ‘do what in its opinion is fair in all the circumstances' when deciding a dispute means that FOS does not take into account relevant legal principles in its determinations," Tregellis said. "This analysis ignores the judicial guidance on the particular paragraph of the Terms of Reference which requires FOS to have regard to applicable legal principles along with good industry practice, relevant industry codes and past FOS decisions in reaching a determination on a dispute."
"Those arguing for a more legalistic approach for disputes at FOS also ignore the major recent reforms to the civil jurisdictions of the courts, federally and in a number of states, which increasingly focus on the importance of all parties in a civil dispute resolving disputes early and using alternative dispute resolution mechanisms," his letter said. "Further, there are formal obligations on all parties involved in a dispute to focus on effective resolution of the matters in dispute, rather than engage in legalistic tactics."
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