ASIC proposes new cap
Jeremy Cooper
In an effort to improve the way financial services businesses resolve disputes with consumers, ASIC has proposed to increase the cap on compensation that can be awarded under the external dispute resolution (EDR) scheme to $280,000.
The proposal is a key part in the Australian Securities and Investments Commission’s Consultation Paper 102: Dispute Resolution — update of RG 139 & RG 165.
ASIC deputy chairman Jeremy Cooper said the move to increase the cap would ensure that the majority of consumer complaints could be heard through an EDR scheme, as an alternative to the court process, and reflected the significant increases in the value of consumers’ investments in recent years.
“This would mean that some schemes would need to lift their current limits within an appropriate transitional period,” he said.
The release of the consultation paper follows the amalgamation of three dispute resolution bodies, under the newly formed Financial Ombudsman Scheme.
“It is timely that we review our guidance so that the new Financial Ombudsman Service has the best possible framework in which to develop its terms of reference over the next 18 months and set the standard for external dispute resolution,” Cooper said.
The Financial Planning Association (FPA) welcomed the review, but warned that proper consultation would be required before the $280,000 cap was confirmed.
FPA chief executive officer Jo-Anne Bloch said: “We also note that the Financial Industry Complaints Service (FICS) previously committed to reviewing monetary limits in 2009, after extensive debate late last year. There were no commitments made to increasing limits to $280,000 any earlier.
We would be extremely concerned if greater pressure was applied to this issue without the appropriate consultation and consideration of the impact for members.”
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