Disputes with financial services or credit providers
What is internal dispute resolution (IDR)?
All licensed financial services or credit providers must have in place a process to resolve disputes with consumers. This process is known as internal dispute resolution (IDR), as the licensee must attempt to resolve the dispute with you directly.
This is the first step you must take in resolving your dispute.
If you are unhappy with the outcome of the IDR process, you can seek help from an external dispute resolution (EDR) scheme.
What are external dispute resolution (EDR) schemes?
After you have been through the IDR process, you can seek help from an external dispute resolution (EDR) scheme.
EDR schemes offer a free and independent service to consumers to resolve disputes between consumers and providers of financial services or credit. EDR schemes are an alternative to going to court, which can be expensive.
Australian financial services (AFS) licensees, Australian credit licensees and credit representatives are all required to hold membership with an ASIC-approved EDR scheme, like the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO).
If you have a dispute about a superannuation fund's actions or decisions, you can go to the Superannuation Complaints Tribunal, if the dispute has gone through the fund's IDR process.
EDR schemes can:
- help you resolve your complaint with the business (often through negotiation or conciliation)
- ask for further information from you or the business to help deal with your complaint, and/or
make a decision that is binding on the financial services or credit provider, if it is accepted by you. This may include ordering that compensation be paid to you if you have suffered a loss, or resolving the dispute in another way.
There are monetary limits on the claims that EDR schemes can deal with. For more information, contact the relevant EDR scheme for the financial services or credit provider.
What you should do
Try to resolve your dispute with the financial services or credit provider through the IDR process. If you are unhappy with the response at IDR, you should take your complaint to the EDR scheme. You have the right to have your complaint dealt with.
Complain to the business (IDR)
Contact the financial services or credit provider and ask for details of their complaints officer.
The contact details for the complaints officer should also be on the provider's website or in the Financial Services Guide or relevant Product Disclosure Statement.
You can complain online or make a written complaint with the complaints officer and give them an opportunity to respond to you. Many disputes are resolved this way.
The business should try to resolve your complaint in a timely way and there are limits on how long a response should take (check with the relevant business for details). This response should tell you:
- the final outcome of your complaint at IDR
- about your right to take your complaint to an EDR scheme if you are unhappy with the decision at IDR.
Complain to the EDR scheme
If you are not happy with the outcome of the IDR process, you should contact the provider’s EDR scheme to make your complaint.
The financial services or credit provider should tell you the name and contact details of their EDR scheme when they tell you about their decision on the complaint lodged through their IDR process.
Alternatively, find out if the provider is a member of an EDR scheme by searching the membership lists of FOS and/or CIO.
FOS can be contacted on 1800 367 287.
CIO can be contacted on 1800 138 422.
Note: An EDR scheme can only hear a dispute if the provider is a member of that particular scheme.
For more guidance on how to make a complaint and how the scheme will deal with your complaint, see the scheme's website.
What can an EDR scheme do?
Schemes must deal with complaints fairly and will deal with complaints with varying degrees of formality depending on the type and complexity of the complaint. They can require a business to take a range of steps to resolve a complaint. This may include:
- correcting an error made in an interest rate calculation
- paying an insurance claim in part or in full
- paying money to make good on investment or other losses, or
- cancelling a loan or working out a payment plan for debts with people that you owe money to.
After considering the issues, the scheme may decide that the business has dealt with your complaint appropriately and does not need to award any compensation or take any further steps.
Scheme decisions are binding on the business (if you accept the decision), but you retain your rights to take your complaint to court.
What are your other options?
If you are unhappy about the decision of the EDR scheme, it may be that taking your complaint to court is the only avenue available for you to be compensated for your loss, particularly if you have suffered a large loss.
If you are unsure of how to access legal advice, contact the Law Society in your state or territory.
ASIC and disputes with financial services or credit providers
ASIC’s role is to provide oversight to EDR schemes to ensure they are working (and continue to work) effectively in dealing with consumer complaints. This means we approve the rules within which the schemes operate and ensure that they meet their obligations as an approved complaints scheme.
EDR schemes are independent and are responsible for their own internal processes and management of disputes.
ASIC does not provide dispute resolution services like EDR schemes do.
This means that we cannot:
- order that money be paid to make good on investment or other losses
- cancel a loan or work out a payment plan for debts with people that you owe money to
- tell EDR schemes what to do and what decisions to make (they are independent)
- make a binding decision about who is right or wrong in a dispute
- review decisions by EDR schemes (only the court can reconsider a matter that has been before an EDR scheme), or
- give legal advice or generally act on behalf of individual consumers, as we are a regulator.
For these reasons, our role in helping you resolve your issue is to guide you to the appropriate place to deal with it.
In our oversight role, we do take feedback about your experience with an EDR scheme. However, this does not include intervening in the decision-making process of the scheme.
We will take note of and consider the issues raised by the public about financial services or credit providers or representatives. This is valuable information for us in performing our oversight role.
Where can I get more information?
- More information about ASIC’s role and the laws we manage.
- For more information about EDR schemes' decisions, see Information Sheet 176 External dispute resolution: What to do if you are unhappy with a scheme decision (INFO 176).
- For more information about EDRs including sample complaint letters for lodging a dispute with your service provider see ASIC's MoneySmart website.
This is Information Sheet 174 (INFO 174), reissued in October 2015. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.