Dispute resolution merger idea slammed

All financial service providers are required to be members of an approved dispute resolution scheme, of which there currently four: the Banking Ombudsman, the Insurance and Savings Ombudsman (ISO), Financial Dispute Resolution (FDR) and Financial Services Complaints Limited (FSCL).

But this could be too many, according to the MED, which raised the issue in its briefing to the incoming Minister of Consumer Affairs.

"There are four dispute resolution schemes for the financial sector. The Banking Ombudsman Scheme and Insurance and Savings Ombudsman Scheme have both existed for about two decades," the briefing said.

"Whether four financial sector dispute resolution schemes is the most efficient way to deliver financial sector dispute resolution services needs to be considered especially taking into account Australia has just one scheme."

Susan Taylor, chief executive of FSCL, said the MED was wrong in its claim there is only one dispute resolution scheme in Australia.

There are actually three, she said: the Financial Ombudsman Service, the Credit Ombudsman Service and the Superannuation Complaints Tribunal.

"The comment came as a surprise to us," she told Good Returns. "There's been no consultation - it hasn't been brought up at all in conversations with us."

She also noted that three of the four dispute resolution schemes in New Zealand are operated by the private sector (FDR was set up by the government and receives funding from a levy on all financial service providers).

"All three private sector schemes seem to be operating efficiently and effectively," she said. "I don't know about the government scheme because they don't publish their financial statements."

Taylor said the merger proposal "would seem to run counter" to the MED's aim of increasing competition.

"There's no evidence the competition amongst the schemes affects efficiency in any negative way. Healthy competition promotes transparency, accountability and best practice."

Professional Advisers Association Edward Richards also voiced his concerns about the suggestion to have only one dispute resolution scheme.

"The thing is that it could be seen as very anti-competitive - you'll have only one choice of scheme, one price and one level of service.

Comments from our readers

On 8 February 2012 at 6:17 pm Bazza said:

The BO and ISO where orignally set up and funded by the large financial institutions. I wonder where the MED got this idea from? The ISI is already less relevant, so maybe they are worried that other members might leave the ISI and ISO and go somewhere else? This could be part of the 800 pound gorilla strategy? just saying...

Dispute resolution merger idea slammed

A proposal to merge the four financial dispute resolution schemes into one has met with strong opposition, with critics labelling the idea "anti-competitive".

Wednesday, February 8th 2012, 6:00AM 1 Comment

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