ASIC has today approved new Terms of Reference (TOR) for the Financial Ombudsman Service Limited (FOS). This will give consumers increased access to the independent financial services dispute resolution body for new complaints received from 1 January 2010.
FOS deals with complaints from consumers and retail investors about member banks, credit unions, building societies, general insurers, life insurers, insurance brokers, financial planners and stockbrokers where the complaint could not be resolved in house.
The new TOR will provide a more consistent treatment of consumers and industry members than the currently operating five separate sets of rules and guidance of FOS’ predecessor schemes:
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the Banking and Financial Ombudsman Service (BFSO) – now the General Banking stream of FOS;
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the Insurance Ombudsman Service (IOS) – now the General insurance stream of FOS;
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the Financial Industry Complaints Service (FICS) – now the Investments, Life Insurance and Superannuation (ILIS) stream of FOS;
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the Credit Union Dispute Resolution Centre (CUDRC) – now the Mutuals stream of FOS; and
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the Insurance Brokers Disputes Limited (IBDL) – now the Insurance Brokers stream of FOS.
Key changes in access under the new TOR compared with under FOS’ predecessor scheme rules include:
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Stream of FOS |
Access under FOS’ predecessor scheme rules |
Access under the new FOS TOR |
|---|---|---|
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General Banking stream of FOS |
Complainants can access FOS if their total monetary claim does not exceed $280,000 |
Complainants will be able to access FOS if the value of their claim does not exceed $500,000. FOS will be able to award compensation of up to $280,000 for direct loss. If compensation for consequential loss and interest is awarded, it will be in addition to direct loss. |
|
General Insurance stream of FOS |
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Mutuals stream of FOS |
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ILIS stream of FOS |
For complaints involving an income stream under a life insurance policy, complainants can access FOS if the monthly income stream does not exceed $6,000. For all other complaints, complainants can access FOS if their total monetary claim does not exceed $150,000. |
Complainants will be able to access FOS if the value of their claim does not exceed $500,000. For complaints involving an income stream under a life insurance policy, from 1 January 2010, FOS can award up to $6,700 per month. (Please note: from 1 January 2012, FOS can award up to $7,500 per month). For all other complaints, FOS can award up to $150,000 for direct loss. (Please note: from 1 January 2012, FOS can award up to $280,000 for direct loss). If compensation for consequential loss and interest is awarded, it will be in addition to direct loss. |
|
Insurance Broking stream of FOS |
Complainants can access FOS if their total monetary claim does not exceed $100,000. |
Complainants will be able to access FOS if the value of their claim does not exceed $500,000. Where the complaint relates to broking of a life insurance policy:
Where the complaint relates to broking of a general insurance policy, from 1 January 2010, FOS can award up to $100,000 for direct loss. (Please note: from 1 January 2012, FOS can award up to $150,000 for direct loss). If compensation for consequential loss and interest is awarded, it will be in addition to direct loss. |
Further changes to the terms of reference likely in 2010
ASIC is currently consulting on proposed updates to dispute resolution requirements for consumer credit and margin lending (see CP 112) and will consult in early 2010 on updates for trustee companies that provide traditional trustee company services. These consultations are likely to result in FOS needing to update the new terms of reference during 2010 to adequately accommodate disputes relating to these areas.
Background
All licensed financial services providers in Australia are required to be a member of an ASIC approved external dispute resolution scheme. FOS is the larger of the two such approved schemes.
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