FOS claims limit set to rise to $500,000

The Financial Ombudsman Service (FOS) appears set to be able to accept complaints by consumers against financial advisers up to a value of $500,000 from next year.

All that remains is for the Australian Securities and Investments Commission (ASIC) to approve under regulatory guide 139 the ombudsman’s new terms of reference for the claims limit to rise from its curent level of $100 000 or in some cases $150 000.

These terms of reference were submitted to ASIC last week following FOS’s annual conference in Melbourne.

The terms of reference essentially set out the basics of how FOS operates and also what the limits of its claims and awards jurisdiction are, and will replace existing terms of reference from the Financial Industry Complaints Service era.

A $500,000 claims limit will come into effect on January 1 next year should the terms of reference be approved by ASIC, an increase from the current limit of $100,000 or in some cases $150 000.

As of January 2012 the awards limit cap wil rise from a current $150 000 to $280 000, except for some insurance broking complaints, which will remain limited to $150,000.

“The regulator could come back to us and request modification of our terms of reference if it does not like them, although we think if that happens these will be only minor changes," said FOS ombudsman for investments, life insurance and superannuation Alison Maynard.

She said the major changes in the new terms of references are that “we can accept complaints that are above the monetary limits, but any awards we make (to consumers) are capped at those limits".

“We will, however, be able to accept complaints beyond those limits to $500,000 in terms of the regulatory guide 139 that ASIC recently issued," and which has been incorporated into the terms of reference.

Maynard said the FOS will also be developing internal operation guidelines in consultation with all stakeholders to accompany the terms of reference.