No right of appeal hurts FOS' credibility
The Financial Ombudsman Service (FOS) no doubt believes it is doing a good job, and it is certainly operating within the guidelines laid down by the Australian Securities and Investments Commission (ASIC) – but its decisions should be just as subject to appeal as those made by ASIC itself.
If a financial adviser or licensee is subject to sanction by ASIC, that person has the right of appeal to the Administrative Appeals Tribunal (AAT). Natural justice would suggest that decisions of the FOS should be similarly open to appeal, if not to the AAT then to another appropriate body or judicial authority.
The FOS chief ombudsman, Colin Neave, is quite right in pointing out that his organisation is acting within the letter and intent of the legislation, regulation and guidelines under which it is required to operate.
However, that does not mean the legislation, regulations and consequent guidelines are soundly based or that the absence of a right of appeal against a FOS decision does not represent a glaring oversight in need of address.
Neave cannot simply assert that the decisions of his organisation are beyond reproach thanks to the technical and legal skills of its staff and members.
If the decisions of the august jurists who sit on the bench of the State Supreme Courts can be appealed to the High Court of Australia, then it ought to follow that the absence of an appeals mechanism with respect to FOS is, at best, an oversight and, at worst, a denial of natural justice.
Those who are calling for the right of appeal are neither renegades nor cowboys, they are simply practitioners within the Australian financial services industry who are concerned that a certain, negative perception is evolving amongst planners out of past determinations handed down by FOS.
If Neave and his associates within FOS are confident of the “fair, legally robust and transparent” nature of their decisions, then they should have no issue with them being subjected to scrutiny by a higher judicial authority.
Indeed, the elephant in the room with respect to the lack of an appeals mechanism from FOS determinations is just how many of its decisions would have withstood the scrutiny of such an appeals process.
The establishment of an approved External Dispute Resolution scheme covering the financial planning industry represented good policy when it was introduced, and it represents good policy today. It would be even better policy if it allowed for an appeals process.
It is probably too much to hope that this particular Government will facilitate the necessary change as part of the Future of Financial Advice process.
AUTHOR
Mike Taylor
Recommended for you
In this week’s episode of Relative Return Unplugged, AMP chief economist Shane Oliver joins the show to unravel the web of tariffs that US President Donald Trump launched on trading partners and take a look at the way global economies are likely to be impacted.
In this episode of Relative Return, host Laura Dew is joined by Andrew Lockhart, managing partner at Metrics Credit Partners, to discuss the attraction of real estate debt and why it can be a compelling option for portfolio diversification.
In this week’s episode of Relative Return Unplugged, AMP’s chief economist, Shane Oliver, joins us to break down Labor’s budget, focusing on its re-election strategy and cost-of-living support, and cautioning about the long-term impact of structural deficits, increased government spending, and potential risks to productivity growth.
In this episode of Relative Return, host Laura Dew chats with Mark Barnes, head of investment research, and Catherine Yoshimoto, director of product management, from FTSE Russell about markets in Donald Trump's second presidency and how US small caps are faring compared to their large-caps counterpart.
