Frequently Asked Questions

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Does it matter where I live?

No. We can assist you no matter where you reside in Australia.

What is a financial service?

A financial service refers to a service provided by the finance market to a customer and describes organisations that deal with the management of money, such as banks, insurance companies, mortgage brokers, financial planners, credit card companies and stock brokerages. Businesses that provide financial services in Australia must hold an Australian Financial Services Licence, which imposes on them strict obligations. Financial services providers are governed in Australia by legislation such as the Australian Securities and Investments Commission Act 2001, Corporations Act 2001, Insurance Contracts Act 1984, the Australian Consumer Law and the Competition and Consumer Act 2010.

What is a professional service?

A professional service is a service provided by a formally certified member of a professional body such as an accountant, tax agent, solicitor, barrister, tax agent, financial adviser, stock broker, real estate agent, insurance broker, mortgage broker, engineer and doctor.

What is a financial or economic loss?

Financial or economic loss refers to the monetary loss and damage suffered by a person rather than as physical injury to the person or destruction of property.

How can I try to recoup my economic or financial losses or lost money?

There are various ways one could try to recoup their economic or financial loss where it has been caused by someone else’s conduct including by informal or formal methods.

Informal methods include by way of a complaint or private negotiation with your offender.

Formal methods include making an application to a statutorily appointed dispute resolution mechanism such as Financial Ombudsman Service (FOS), Credit and Investments Ombudsman Service (CIO) and the pending Australian Financial Complaints Authority (ACMA) or commencing court proceedings in the Local Court, District Court, Supreme Court, Federal Magistrates Court, or the Federal Court of Australia and/or making a complaint to the Australian Securities and Investments Commission (ASIC), Australian Competition and Consumer Commission (ACCC) or the Australian Prudential Regulation Authority (APRA).

How may I avoid going to court?

You may avoid having to go to court by negotiating a pre-litigation settlement with the financial or professional service provider that has caused you to suffer a loss. This could be done by way of a settlement conference, mediation or by an exchange of correspondence. We can assist you with this and make sure that any settlement is properly recorded in a binding legal document that goes some way to protecting your settlement and post settlement interests.

If your complaint or claim cannot be settled then there are some independent complaint bodies with which you may lodge formal complaint seeking a remedy, including a monetary remedy, providing your complaint falls within its terms of reference. We can assist you with preparing your complaint form, your case bundle in support of your complaint and making written submissions to these dispute resolution bodies on your behalf. We frequently do this for clients.

Below is some information on the different types of independent complaint resolution bodies you may utilise.

What is a Dispute Resolution Service?

A Dispute Resolution Service (DRS) is an organisation that is set up, often by a statute, that provides a forum to receive, hear and adjudicate complaints by a panel of appointed members.  This is as an alternative to the court process and is typically less cost prohibitive.  

The current DRS that are relevant to financial complaints are the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman Service Office (CIO).  The commonwealth government has announced an intention to create a new DRS for financial complaints to be called the Australian Financial Complaints Authority (AFCA).

What is the Financial Ombudsman Service?

The Financial Ombudsman Service (FOS) is an industry body made up from a membership base of financial services licence holders such as banks, insurance companies, financial planners, wealth managers, mortgage brokers, finance and credit companies and so on. It aims to be a cheap, fast and easy avenue for consumers of these services to resolve complaints.

FOS in its present form has been operating since 2008 and is set up as a co-regulatory scheme overseen by the national watchdog, the Australian Securities and Investment Commission. FOS is there to step in when banks and other financial service providers are breaking the rules.

Not all consumer disputes will fall within the terms of reference established for FOS. For example, when the dispute relates to an issue of law that is not clear, is a class action, or involves a significant claim, other formal court proceedings may be the more appropriate route to dispute resolution.

The final FOS decision is binding on the financial institution but not on the consumer, so individuals are able to pursue an action in the courts if they are not satisfied with the outcome of the FOS dispute resolution process.

What does a complaint to the Financial Ombudsman Service involve?

Before contacting FOS you typically need to raise your complaint with your financial service provider and go through its internal dispute-resolution process. If you are not happy with the outcome, or you’ve had no response for 45 days (for general disputes), you can lodge your complaint to FOS.

Once FOS determines that your complaint fits within its terms of reference, it will contact the financial service provider directly about your complaint. In some cases the issue is resolved here. If not, the next stage of the process is a three-way teleconference, which is attended by you, a representative from FOS and your financial service provider.

If it is still not resolved, the matter will be referred to a specialist team at FOS, which will give a recommendation in writing. If either party does not agree with the recommendation, the dispute will proceed to Determination. Determination is binding on the financial service provider but not on the consumer.

Remember if you don’t agree with the FOS Determination, you can seek other avenues for redress; for example, through the courts.

What is the Credit and Investments Ombudsman (CIO)?

Much like FOS, the Credit and Investments Ombudsman (CIO) provides consumers of credit and investment services with an accessible and independent external dispute resolution (EDR) service, approved by the Australian Securities and Investments Commission (ASIC). The Board must consist of an equal number of Consumer and Industry Directors, and an independent Chair, under the CIO Constitution.

What does a compliant to the Credit and Investments Ombudsman Service involve (CIO)?

As the consumer, you should first give your financial services provider an opportunity to resolve the complaint. We can assist you with contacting the person you originally dealt with or the organisation’s customer complaints area to discuss your complaint. If the complaint remains unresolved, or if the organisation does not respond, we can assist you with formulating, preparing and lodging your complaint with the CIO. Within 48 hours, most complaints will be registered into the complaints handling database of the CIO. Notices will then be to the financial services provider and you confirming receipt of the complaint. The financial services provider then has 7 days to provide CIO with a copy of its response. The financial services provider can also use this time to try to resolve the complaint before it is progressed.

If your complaint is not resolved, or if the information received does not indicate that the complaint should be closed under the CIO Rules, your complaint will be moved to the next stage, which involves the CIO gathering all of the information it needs to assess your complaint. We assist clients with preparing the information the CIO needs and requests. We also assist clients by preparing legal submissions for them to assist the CIO as to the current law governing your complaint and how the law can be applied to your situation.

If the complaint is still not resolved after the information gathering process, then the CIO conducts and investigation and providing a preliminary assessment or recommendation. If the CIO’s Recommendation is not accepted, then your complaints proceeds to a Determination.
If you accept the CIO’s final Determination, then the financial services provider is bound by the Determination. If you do not accept CIO’s Determination, then you are free to pursue your complaint though other means, such as court.

How can the 2017-18 Federal Budget Proposed Reforms help me with my financial services claim?

The Government will introduce a new dispute resolution framework that will empower the bank, financial services and superannuation customers. The Government will also implement a package to increase accountability in the financial sector and make it more competitive. This will mean more choice, better services and greater protections for all Australians.

The financial services sector affects all Australians and is a backbone of the economy. For it to work effectively, Australians need to be confident that financial services providers will serve their interests. Too often banks and the sector have not met those expectations.

The Commonwealth Government has announced that it is taking action to ensure the sector meets the expectations of the Australian community.

The Commonwealth Government will create a new dispute resolution framework. There will be a new one-stop shop — the Australian Financial Complaints Authority (AFCA) — for external dispute resolution.

The Commonwealth Government also intends to legislate a new Banking Executive Accountability Regime that will make senior bank executives more accountable and subject to additional oversight by the Australian Prudential Regulation Authority (APRA).

The Commonwealth Government will also introduce a number of reforms to boost competition and choice for Australian consumers in the financial system.

How does the Commonwealth Government propose improving dispute resolution, complaints and claims?

The Commonwealth Government intends to introduce major reforms to provide customers with access to fair dispute resolution in Australia by introducing a new one-stop shop. A new one-stop shop will deal with all financial disputes, including superannuation, and provide access to free, fast and binding dispute resolution.

What is the Australian Financial Complaints Authority (AFCA)?

It is intended that the new body, the Australian Financial Complaints Authority (AFCA), will be able to hear disputes of a higher value so that more consumers and small businesses will have their disputes heard, and if they have wrongfully suffered a loss, access fair compensation. Financial firms will be required to be members of AFCA, and its decisions will be binding on all firms.

It is intended that AFCA will be governed by an independent board, with an independent chair and equal numbers of directors with industry and consumer backgrounds, and be wholly funded by industry. AFCA will commence operations from 1 July 2018. The existing dispute resolution bodies will continue to operate after 1 July 2018 to work through their existing complaints.

Under the Government’s new proposed framework, small business disputes related to loans of up to $5 million will be heard by the one-stop shop, which will be able to award compensation of up to $1 million. This will ensure more small businesses have access to free, fast and binding dispute resolution.

What will be ASIC’s role in the future in respect to policing the banks and other financial services providers?

ASIC will be provided with stronger powers to oversee the new one-stop shop. ASIC will have a general directions power to ensure AFCA complies with legislative and regulatory requirements. To increase accountability, the Commonwealth Government will also legislate to require financial firms to report to the Australian Securities and Investments Commission (ASIC) on internal dispute resolution outcomes.

What is the Banking Executive Accountability Regime?

Senior executives and directors of authorised deposit-taking institutions (ADIs), including all banks, will be required to be registered with APRA. The ADI will have to advise APRA prior to making a senior appointment. This will mean APRA will have visibility of all ADI senior appointments prior to them being made. Where senior executives have been found not to have met expectations they will no longer be able to be registered or employed in senior roles. ADIs will be required to provide APRA with accountability maps of senior executives’ roles and responsibilities to enable greater scrutiny at the time of each person’s appointment and oversight of problems that emerge under their management.

APRA will also be given stronger powers to remove and to disqualify senior executives and directors. These powers will apply to all institutions regulated by APRA. Persons removed or disqualified under these powers would have to appeal to the Administrative Appeals Tribunal to have a decision reviewed.

The proposed new regime will establish expectations on how ADIs and their executives and directors conduct their business consistent with good prudential outcomes. These expectations will cover matters such as conducting business with integrity, due skill, care and diligence and acting in a prudent manner.

It is also proposed that a new civil penalty will be created with a maximum penalty of $200 million for larger ADIs, and a maximum penalty of $50 million for smaller ADIs, that fail to meet these new expectations, increasing incentives for ADIs to put in place processes to ensure they conduct their operations appropriately. APRA will also be able to impose penalties on ADIs that do not appropriately monitor the suitability of their executives to hold senior positions. APRA will also be given stronger powers to require ADIs to review and adjust their remuneration policies when APRA believes such policies are not appropriate.

What is open data?

The Commonwealth Government has proposed to increase consumer choice and improve competition in banking by giving customers access to and control over their banking data by introducing an open banking regime in Australia.

Increased access to data will improve the information available to consumers and better enable innovative business models to create new products tailored to individuals.

Disclaimer: This guide constitutes a summary of the information of the subject matter covered. This information is of a general nature and should not in any way be construed as legal advice.

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