Location Australia Founded 1 July 2008 | Chief Ombudsman Shane Tregillis Headquarters Melbourne | |
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Predecessor Financial Industry Complaints ServiceBanking and Financial Services Ombudsman Formation 1 July 2008 (2008-07-01) Membership Australian banks, insurers, credit providers, financial advisers and planners, debt collection agencies and other businesses that provide financial products and services Affiliations Australian Securities and Investment Commission | ||
The Financial Ombudsman Service (FOS) is a member-funded Australian ombudsman service that provides external dispute resolution for consumers who are unable to resolve complaints with member financial services organisations.
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As of 30 June 2016 the FOS had approximately 5,500 licensed member organisations that included banks, insurers, credit providers, financial advisers and planners, debt collection agencies and other businesses that provide financial products and services; together with an additional 8,000 authorised credit representatives. The Service is governed by its term of reference which allow for it to hear matters within six years of the first knowledge of a financial loss and, since January 2015, for the Service to award remedies capped at A$309,000. In 2015-6, the FOS received 34,095 disputes and closed 32,871 disputes; a seven per cent increase on the number of disputes received during the previous year and a five per cent decrease on the number of disputes closed.
The FOS is lead by the Chief Ombudsman, presently Shane Tregillis. He is supported by lead ombudsmen for banking and finance, general insurance, and investment and advice; with ten other ombudsmen supporting various functional areas and disputes.
Governance
The FOS is governed by an independent board of consumer representatives and financial services industry representatives. The Chair of the Board, since 2015, is Professor the Hon. Michael Lavarch AO. A public company limited by guarantee, called the Financial Ombudsman Service Limited, is the owner of the FOS. This company is approved by the Australian Securities and Investment Commission (ASIC) in accordance with Regulatory Guide 139.
History
FOS was established on 1 July 2008 following the merger of the Financial Industry Complaints Service (FICS) with the Banking and Financial Services Ombudsman (BFSO) and Insurance Ombudsman Service (IOS); all of which were industry self-regulatory bodies.
Senate complaint
In 2015 a complaint was raised in Submission 134 to the Senate committee on the scrutiny of financial advice concerning six conversations between the Ombudsman and a consumer’s representative, who had recorded the telephone conversation. Submission 134 made it clear that there were differences between the telephone recordings and the working notes of those conversations made by the Ombudsman. Thereafter the Ombudsman was reported by media as having confirmed "the decision to refer the matter to a court given the complexity of the dispute, the inability of FOS to cross examine all relevant witnesses and compel the production of information from third parties, as well as the need to engage experts", even though in recordings of the conversations the same Ombudsman said the only reason to dismiss the complaint was lack of staff, that the complaint had merit and that if FOS had staff they would have ruled the dispute inside jurisdiction. It was this decision that subsequently resulted in Supreme Court proceedings to challenge the jurisdictional decision of FOS not to handle the particular complaint.
FOS did not respond and denied the lapses between what was recorded by FOS and what actually occurred. ASIC did not respond to the questions and, since the filing, other senators called for FOS to explain the circumstances. ASIC appeared before the Joint Committee on Corporations and Financial Services on 16 March 2015, where it stated that the Court dealt ith the issue of the misleading file notes. However, the Court stated in its judgment that it did not examine any issues beyond the actual decision of FOS itself, thus it did not examine any materials (including the file notes and the recordings), nor did it dealt with any allegations of misconduct. The FOS released a media statement attempting to dismiss the allegations and rely on the ruling by the court. However, this statement did not address the substance of the allegations in the submission which concerned misleading file notes presented in the discovery phase of a trial.
The Law Council of Australia (LCA) had no comment given that the person who was the subject of the allegations, Dr. Justijana Tonti-Filippini, held the position of deputy chair of the financial services committee for the business section of the LCA. There was no action taken by the Victorian Legal Services Commissioner despite the individual named as a person admitted to practice in Victoria. As a party to the case, which would have benefited, the Australia and New Zealand Banking Group did not comment on the case. Subsequently there were calls by a number of Australian Senators, including Senator Nick Xenophon, for the FOS to be disbanded and replaced with a government funded body.
Despite criticism of the FOS, consumer advocacy group CHOICE and the government regulator, ASIC, are generally supportive of the FOS. CHOICE has stated that "while there is room for improvement, the Financial Ombudsman Service is providing an essential service of a high standard." Furthermore ASIC have continued to support FOS as an 'approved EDR scheme'. In November 2016 the FOS disavowed responsibility to enforce its rulings, effectively forcing consumers to seek formal Court-based enforcement proceedings and thus moving against the role of FOS as an informal method of consumer redress.
Government review
In 2016 the government announced a review into Australia's EDR schemes for the financial system, including the FOS. In November 2016 a Lower House parliamentary committee, which has a majority of incumbent government MPs, concluded that the should be replaced. The outcome of the EDR review is expected in March 2017. In December 2016 an Australian Treasury appointed panel agreed that the FOS needs an added accountability mechanism in the form of an independent auditor.