The Ombudsman Services – Government Review of the Financial System EDR
Read the Financial Reviews story below about the Governments Interim Report into review of EDR system recommending to roll the existing ombudsman schemes into one in preference to creating a tribunal as suggested by the Prime Minister:
Ian Ramsay review finds no need for a new bank tribunal by Joanna Mather
Professor Ian Ramsay: ‘Our recommendations, which have the effect of strengthening external dispute resolution and allowing more disputes through the door, will address many of the concerns that have fed into the debate about a potential tribunal.’ Josh Robenstoe
Prime Minister Malcolm Turnbull’s plans for a bank victims tribunal have been dealt a blow by an expert panel whose central recommendation is to forget the idea.
Existing ombudsman services should instead by rolled into a single scheme with greater scope to deal with complaints against financial services companies and credit agencies, an interim report says.
Moreover, the Superannuation Complaints Tribunal should be turned into an ombudsman-type body.
“We do not believe that a new tribunal is required,” said University of Melbourne professor Ian Ramsay, who is leading the review.
The review was announced by the federal government in April as part of efforts to fend off Labor’s call for a royal commission into the sector.
Coalition MPs were threatening to cross the floor and in October Mr Turnbull said there would be “one tribunal that deals with consumer claims in the most cost-effective and speedy way to get these matters resolved”.
“You can rest assured that we’ll obviously wait for the advice from Ramsay’s expert group as to how it should be set up, but we will get a low-cost, speedy tribunal to deal with these types of consumer complaints, customer complaints against banks.”
Ombudsman can ‘overcome power imbalances’
Tribunals are “statutory, independent legal institutions established to provide a platform to resolve specific disputes”, the interim report says.
They tend to be less accessible, less flexible and more legalistic than ombudsman services.
“Unlike the traditional court system, which relies on lawyers, the rules of evidence and specific processes and procedures which can be complex and intimidating for consumers, ombudsman schemes provide claimants with a relatively simple process.”
They help “overcome power imbalances” and “identify systemic issues”.
The recommendation is to combine the existing industry-funded Financial Ombudsman Service (FOS) and Credit and Investments Ombudsman (CIO).
The new service would able to hear complaints involving higher sums of money than the present FOS limit, which is $500,000, and award more compensation.
“It’s inevitable that the caps have to go up,” Professor Ramsay said. “The question we want people to turn their minds to now is by how much.”
A new compensation scheme of last resort would be established to pay out the victims of companies that go bust.
Minister explains preferred approach
Revenue and Financial Services Minister Kelly O’Dwyer explained that the government’s preferred approach was for a small ‘t’ tribunal.
“When the Prime Minister was talking about a tribunal he was talking about a small ‘t’ tribunal, which was a catchall for having a one-stop consumer complaints stop,” she told the ABC’s The World Today on Tuesday.
“One is far more legalistic, which means it is probably less consumer friendly and that is a ‘big t’ tribunal,” Ms O’Dwyer said.
“That makes it more difficult for consumers to engage, which is what the report has found.”
Community legal services argued against a bank tribunal, preferring a beefing up of the existing regime.
FOS chief ombudsman Shane Tregillis said he was pleased to see the interim report support the establishment of a compensation scheme of last resort. Determinations taken by FOS but not paid currently total $17 million.
Credit and Investments Ombudsman Raj Venga railed against the recommendations. “This is a political compromise designed to head off an all-encompassing statutory tribunal,” he said.
“It will create a new giant quasi-regulatory bureaucracy which will be geared towards large institutional players, such as banks and insurers, who attract the vast majority of complaints, not small financial service providers.”
A final report is due by the end of March, 2017.
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