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
Join us for a special episode of Relative Return Unplugged as hosts Maja Garaca Djurdjevic and Keith Ford are joined by shadow financial services minister Luke Howarth to discuss the Coalition’s goals for financial advice.
In this special episode of Relative Return Unplugged, we are sharing a discussion between Momentum Media’s Steve Kuper, Major General (Ret’d) Marcus Thompson and AMP chief economist Shane Oliver on the latest economic data and what it means for Australia’s economy and national security.
In this episode of Relative Return Unplugged, co-hosts Maja Garaca Djurdjevic and Keith Ford break down some of the legislation that passed during the government’s last-minute guillotine motion, including the measures to restructure the Reserve Bank into a two-board system.
In this episode of Relative Return Unplugged, co-hosts Maja Garaca Djurdjevic and Keith Ford are joined by Money Management editor Laura Dew to dissect some of the submissions that industry stakeholders have made to the Senate’s Dixon Advisory inquiry.
