FOS reduces backlog but unpaid determinations climb
The Financial Ombudsman Service has reduced its backlog of cases but has struggled to reduce the number of unpaid determinations with that number climbing for the third reporting period in a row to a record high.
In its most recent update FOS stated that unpaid determinations reached 120, up from 114 in November and 105 in August of last year with the value of the determinations at $12.68 million, up from $10.15 million in August last year.
The number of Financial Services Providers (FSP) also climbed from 22 to 26 between August 2014 and January 2015 as did the number of affected consumers — from 150 to 174 over the same time period.
FOS stated the most recent increase during the September quarter was caused by the liquidation of a single financial advisory firm which was unable to meet its obligations in respect of six determinations totalling almost $1.8million.
FOS stressed that these numbers still represented only a very small number of its members across banking, insurance, life insurance and investments but that unpaid determinations represented 30 per cent of all determinations issued in the investments, life insurance and superannuation areas and that nearly 70 per cent of these related to disputes in the financial planning and advisory sector.
With the rising levels of unpaid determinations FOS reiterated its position that professional indemnity was not effective in meeting the compensation and some form of limited compensation scheme of last resort was required.
Despite these increases FOS chair Shane Tregillis said the ombudsman had completed its task of working through its backlog of cases by 31 December 2014 and would spend the first half of 2015 reducing the time taken to allocate current disputes to an Ombudsman where a determination is required.
FOS also indicated it had made changes to its Terms of Reference and will be able to join secondary Financial Services Providers to a dispute if it would lead to a more efficient and effective resolution with this change applying to an open case on FOS' books.
AUTHOR
Jason Spits
Recommended for you
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.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
