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Ombudsman Finance – preparing inaccurate file notes
Following Dispute Assist exposing the Financial Ombudsman Service for preparing inaccurate file notes on ABC 7.30 Report, The Drum follows up on the story reporting that FOS “has failed to explain why a senior official in a quasi-judicial role would make file notes in which she claimed to say things that were not said, nor has it provided any sensible account of why she would document a conversation that did not happen.”
To read the full story click on the link or read the story below:
Opinion
The Financial Ombudsman Service has serious questions to answer over how one of its senior officials handled a contentious matter. But so far no proper answer has been forthcoming, writes Stephen Long.
“Take detailed file notes,” the Financial Ombudsman Service advises clients who use financial services.
“Contemporaneous file notes of conversations or actions are solid gold when a dispute comes to us.” (Their emphasis.)
Oh, the irony.
Earlier this month, the ABC revealed that one of the most senior officials in the Financial Ombudsman Service (FOS) made file notes, tendered in court on a contentious matter, which purported to detail an entire conversation, the majority of which did not take place.
Dr Justi Tonti-Filippini, Ombudsman Decisions at FOS and a former chair of the Law Council’s Financial Services Committee, also made another file note that appears to misrepresent the nature of a conversation.
This is no small matter.
The Financial Ombudsman Service is an alternative dispute resolution scheme banks and other finance companies are required to fund and maintain; being a member of such a scheme is a condition for holding a financial services license.
Tens of thousands of people who can’t afford to go to court use the Financial Ombudsman Service each year. It goes without saying that trust in the integrity of the service is vital.
Yet to this day, nearly 10 months after the issue was first raised with it, the Financial Ombudsman Service has provided no reasonable explanation for this behaviour.
It has failed to explain why a senior official in a quasi-judicial role would make file notes in which she claimed to say things that were not said, nor has it provided any sensible account of why she would document a conversation that did not happen.
The context for the curious affair is this.
Dr Tonti-Filippini was deciding whether or not the Financial Ombudsman Service would make a determination in a long-standing dispute between a small business, Goldie Marketing, and ANZ bank.
After much deliberation, she phoned Goldie Marketing’s advocate and told him that she was exercising her discretion to rule the dispute outside the terms of reference for FOS, because the organisation, after losing key staff, did not have the expertise to deal with it.
She made it clear that FOS would have accepted the case were it not for the staff shortage.
Goldie Marketing mounted a court challenge, arguing that a staff shortage was not a valid reason for ruling the dispute was outside FOS’s terms of reference.
The Supreme Court of Victoria ordered that the ombudsman discover all relevant documents, including file notes; FOS furnished file notes in which Dr Tonti-Filippini said she had “rattled off” of a long list of other reasons for ruling the dispute out in a phone call to Goldie Marketing’s advocate.
But unbeknown to FOS, Goldie Marketing’s advocate had recorded all his conversations with the ombudsman. The recordings and transcripts of those recordings were tendered in court and accepted as accurate.
According to FOS, there is no evidence that its ombudsman made the file notes to mask her reasons for the decision; so what is the explanation?
They show that the actual conversation was a world away from what the file notes said.
She says in her file notes she called the advocate the day before she informed him of her decision and “rattled off” reasons for ruling the case out.
In fact, in that conversation, the transcript of which is not in dispute, she “rattled off” no reasons at all.
Her file notes of the phone call where she did give her reason describe the conversation, inaccurately, as “2nd part of my heads up call” and claim, wrongly, that the ombudsman had “almost got through all reasons for my view earlier in the week”.
All this begs the question: why would a highly experienced and respected lawyer, serving in a role vital to the public, make a supposedly contemporaneous file note that claims important statements were made that were not?
The ABC first raised these issues with FOS about 10 months ago, and again in February and March this year. When we prepared a report for 7.30 on the issue, it declined to participate in an interview. After the story aired FOS responded by issuing a statement.
But the statement by the Financial Ombudsman Service does not provide any explanation for why or how the Ombudsman would provide inaccurate records of her conversations with Goldie’s advocate.
It states, correctly, that the Supreme Court of Victoria upheld FOS’s decision to rule the Goldie Marketing matter outside its terms of reference. But the Court’s decision did not rest on the notes of the Ombudsman. The judge found that the formal, written reasons she later gave were sound and the court did not need to look beyond them.
FOS also takes the application of a basic legal principle – that a court won’t overturn an administrative decision unless it was made in bad faith or so unreasonable that no other decision-maker could have made it – and uses it to imply that the Ombudsman’s conduct was fully examined by the court and cleared.
It was not. The judgement did not deal with the discrepancy between the file notes and what was actually said in conversations.
In this statement and also in communications to me, FOS says the matters we raise have been dealt with by the court. But they haven’t.
Senator Nick Xenophon, who raised questions about the Goldie Marketing controversy in a Senate committee, is scathing.
He says that FOS’s credibility is being undermined by its insistence that the issue has been “fully dealt with” when it has not.
The Australian Securities and Investments Commission (ASIC) oversees the Financial Ombudsman Service and approved its formation.
In questions put to ASIC, Senator Xenophon said:
The FOS files notes raise serious questions as to trust and compliance with ASIC RG 139.23. The FOS has yet to account for the divergence from fact in the file notes despite being requested for an explanation.
And later:
Can ASIC explain if a consumer has a complaint before the FOS, how can they trust the FOS when the Ombudsman creates files notes that do not remotely resemble the facts of the actual recorded telephone conversation, and will a consumer be comfortable that they will receive fair, impartial, efficient and effective service from FOS and will they receive natural justice?
In response, ASIC parroted FOS’s line that the issues have been dealt with by the Supreme Court.
According to FOS, there is no evidence that its ombudsman made the file notes to mask her reasons for the decision; so what is the explanation?
There may be a perfectly reasonable answer. But the Financial Ombudsman Service isn’t giving it.
Stephen Long is an investigative reporter with the ABC, covering business and finance.
