AFA questions FOS operating procedures

AFA/financial-planning/ASIC/government-and-regulation/financial-advice-industry/financial-advisers/financial-ombudsman-service/association-of-financial-advisers/

16 October 2013
| By Jason |
image
image
expand image

The Association of Financial Advisers (AFA) has called into question some of the basic operating procedures of the Financial Ombudsman Service (FOS), stating the service's operations have reduced the level of confidence in the external dispute resolution (EDR) system.

In a submission to the independent review of FOS, the AFA stated that FOS's operating procedures were related to Australian Securities and Investments Commission Regulatory Guide 139 (RG139) which provides oversight of EDRs.

The AFA highlighted a number of areas stemming from RG139 and noted inconsistencies that applied for complainants compared with financial service providers (FSP).

In particular the AFA highlighted that complaints could be made at no-cost to consumers but FSPs had to pay for complaints, even in the event they won the case, and that outcomes of cases were binding on FSPs but not on complainants.

The association also stated that FOS is expected to provide assistance to complainants to draft their complaints — a service not offered to FSPs — while the latter had no avenue of appeal, even in the event where there was a clear error made in the judgement of a case.

The AFA also questioned the level of claims which could be settled by FOS, claiming the increased limit of $280,000 was well beyond the compensation powers of magistrates who were typically limited to award payments of $100,000.

This limit was an important factor given that FOS was not bound by any legal rule of evidence, with the AFA stating it had "taken FOS cases into a space where the industry now questions the level of equity and procedural fairness".

The AFA also stated that under RG139 FOS determinations did not have to be based only on the relevant legal principles but also concepts of fairness and relevant industry best practices, with these structural issues resulting in the level of concern seen by AFA members and within the financial advice industry.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 1 week ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks 1 day ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

2 weeks ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks 1 day ago

TOP PERFORMING FUNDS