Statement from the Independent Review Panel: Professor Ian Ramsay (Chair), Julie Abramson and Alan Kirkland.
Two new ombudsman schemes, one for financial, credit and investment disputes and another for superannuation disputes, with a view to considering integration of the two new schemes in the future, is the key draft recommendation of a Review by an Independent Expert Panel into external dispute resolution bodies in the financial system.
On 8 August 2016, the Panel was provided with Terms of Reference by the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP, which required it to consider whether changes to current dispute resolution and complaints bodies (the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT)) are necessary to deliver effective outcomes for users in a rapidly changing and dynamic financial system.
The Panel today released its Interim Report, which sets out the Panel's draft recommendations for changes to the financial system dispute resolution framework.
'Resolving financial complaints in a way that is low cost, speedy and flexible is important to all parties - consumers, small businesses and the financial firms. It is also critical for confidence in the financial system overall', said Professor Ian Ramsay, Chair of the Independent Panel.
'The current framework is a product of history rather than design. The Review provided the opportunity to consider what was working well, what could be improved and what needs to be done to ensure that we can meet future challenges.'
After extensive consultation with stakeholders, the Panel found that industry ombudsman schemes have many strengths but reforms are necessary to improve outcomes for consumers, particularly by addressing gaps and overlaps between the two existing EDR schemes — FOS and CIO.
The Panel found that the monetary limits and compensation caps for consumers and small businesses — which have the effect of excluding some disputes from the dispute resolution system — are outdated and impeding access to justice, and recommends that these be increased.
The Panel also found that the rigidity of the statutory Superannuation Complaints Tribunal model hampers the flexibility and innovation that are necessary features of a dispute resolution system.
Key draft recommendations include:
- The formation of a single industry ombudsman scheme for financial, credit and investment disputes to replace FOS and CIO.
- The replacement of the SCT with an industry ombudsman scheme for superannuation disputes, along with the development of a Superannuation Code of Practice.
Other draft recommendations include:
- Increases to the monetary limits and compensation caps for the new financial, credit and investment disputes scheme, for both consumer and small business disputes.
- Enhanced accountability and oversight over the two new schemes, including by strengthening the Australian Securities and Investments Commission's powers and more frequent independent reviews.
Once the two new ombudsman schemes are fully operational the Panel sees merit in further integrating the schemes to create a single dispute resolution body for all financial system disputes.
The Panel does not accept that a new statutory tribunal is required on the basis that the integrated package of reforms it is recommending will address many of the problems that led to the debate about a tribunal.
The Panel does, however, see considerable merit in the introduction of an industry‑funded compensation scheme of last resort.
'The Panel's view is that these draft recommendations represent an integrated package of reforms to both address current problems and withstand future challenges. We encourage all stakeholders to be involved in the next stage of consultation, to ensure our final report to government benefits from the broadest possible views from across the Australian financial system and the wider public.'
The closing date for submissions to this consultation is 27 January 2017 and the Panel will deliver its final report to the Government by the end of March 2017.
A copy of the Interim Report is available on the Treasury website.
Media enquiries should be directed to medialiaison@treasury.gov.au or 02 6263 2300.
Biographies of Panel members
Professor Ian Ramsay – Chair
Ian is Professor of Commercial Law at the University of Melbourne; is a member of the Law Council of Australia and currently serves on its Corporations Law Committee.
Ian has extensive experience as an expert consultant to government reviews and as a member of government advisory committees.
Julie Abramson – Panel member
Julie is a lawyer with over 20 years regulatory experience at both Federal and State levels and was appointed as a part time Commissioner at the Productivity Commission in December 2015.
Julie has particular expertise in financial services regulation and competition policy, including as a previous member of the Banking Code of Practice's Compliance Committee.
Alan Kirkland – Panel member
Alan has been the CEO of Choice since August 2012 and has extensive experience in consumer advocacy.