FOS option not explicitly advised to clients
Financial services providers are not explicitly and clearly advising clients of their rights to seek assistance from the Financial Ombudsman Service (FOS) should a dispute arise, while other gaps remained within internal disputes resolution (IDR) mechanisms.
Such was the opinion of lead ombudsman, investment and advice, Dr June Smith, who noted several gaps in relation to IDR at present, including timeliness of decisions made within IDR mechanisms, and the explicit explanation to clients of reasons why they had or had not accepted disputes and the reasons behind the actions they subsequently took.
"So what we would say to financial advisory practices is make sure that you've got timely dispute handling, make sure that you are openly and enthusiastically recording expressions of dissatisfaction, make sure that you've got fair and objective reviews of those disputes when they come through," Smith said.
Making the comments post the 2016 FOS National Conference in Melbourne, Smith also said that through FOS' new registration and referral process, those matters that had been through the IDR process and had landed on FOS' desk would be sent back to the financial services provider or the Australian financial services licensee to allow them to review the dispute again so they could arrive at a resolution with a client internally.
"It says a lot about the culture of an organisation how they actually handle complaints raised by their clients," she said.
On the new life insurance code of practice draft released by the Financial Services Council (FSC), Smith said FOS largely supported initiatives to ensure there was a regular review and update of medical definitions within life insurance policies and trauma cover in particular.
"We would encourage the industry to consider whether or not this should be standard medical definitions or default medical definitions that consumers could rely on if they are adversely impacted by an out of date medical definition going forward," Smith said.
The FOS was aware of new standards that were not currently within the law including matters on timelines for handling disputes and the provision of reasons for decisions.
"If there were matters related to the timeliness of claims handling, or failure to provide reasons for decisions, they are matters that we could take into account if they were raised by an applicant once the code is in place," Smith said.
The FOS continued to push for a compensation scheme of last resort, and welcomed the Australian Bankers' Association's statement in April that it supported such a scheme.
As at 30 June, there were 32 financial services providers who had not complied with 137 unpaid determinations made in favour of around 194 consumers worth a total of $16.7 million, Smith said, adding that this only took FOS disputes into account.
AUTHOR
Malavika Santhebennur
Recommended for you
David Sipina has been sentenced to three years under an intensive correction order for his role in the unlicensed Courtenay House financial services.
As AFSLs endeavour to meet their breach reporting obligations, a legal expert has emphasised why robust documentation will prove fruitful, particularly in the face of potential regulatory investigations.
Betashares has named the top Australian suburbs with the highest spare cash flow, shining a light on where financial advisers could eye out potential clients.
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
