FOS should be benchmark in EDR merger
The Financial Ombudsman Service (FOS) has used the results of a survey of financial counsellors on external dispute resolution (EDR) schemes to argue that while EDR schemes should merge, FOS' processes should be the benchmark in any merger.
The Financial Counselling Australia (FCA) report, ‘External Dispute Resolution: Results of a Survey of Financial Counsellors', which surveyed 197 financial counsellors, found that three quarters of financial counsellors rated FOS with a seven or above, with a weighted average of 7.8, while the Credit Investment Ombudsman received a rating of five or above.
Three quarters of respondents (74.6 per cent) said the FOS and the Credit and Investments Ombudsman (CIO) should merge but FOS' processes should be the benchmark.
FOS chief ombudsman, Shane Tregillis, noted the Financial Counselling Australia's support for the merger in order to reduce complexity for consumers.
"While competition in industry more generally is regarded as beneficial for consumers in lowering prices and improving services, the same cannot be said for competition in external dispute resolution," he said.
"The position of the Australian and New Zealand Ombudsman Association (ANZOA) is that competition runs counter to the core principles of an ombudsman scheme."
Tregillis also noted the Australian Securities and Investments Commission's (ASIC's) position that EDR competition would not improve consumer outcomes, which it outlined in the Financial System Inquiry.
While the respondents said success of the merger would depend on the execution, some respondents said FOS was the more professional of the two organisations, while one respondent said there was no financial data on the long-term benefits of such mergers.
"Typically expertise is lost by redundancy and customer service suffers due to unrealistic service goals. Having met representatives from FOS and CIO at the FC [Financial Counsellors] conference in Adelaide they are very experienced on what each is doing and deliver customer service on a range of clients' problems," one respondent said in the report.
AUTHOR
Malavika Santhebennur
Recommended for you
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
