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FSCL members split on court bid

[UPDATED] FSCL might serve its members better by cutting their membership fees, rather than funding a court bid to calls itself an ombudsman, it has been suggested.

Monday, May 9th 2016, 6:00AM

by Susan Edmunds

The external disputes resolution provider is engaged in a court battle with the Chief Ombudsman, who turned down its request to use the word "ombudsman" in its name, after competitor the Insurance and Savings Ombudsman became the Insurance and Financial Services Ombudsman.

FSCL has refused to say how it is funding its legal  bid.

individual advisers pay $515 each per year to be a member of the scheme. Individual membership fees drop in bigger organisations. Fund managers pay up to about $2000, depending on their FUM.

Members of associations and dealer groups pay $310.

Scheme member Robert Oddy, SiFA chairman, said members had received no information about the court battle.

He said while he could understand FSCL's point of view, there were concerns about where the funding was coming from.

"You'd hope fees aren't going to go up. If they have collected more money than they need, it could be redistributed back to the people who paid it. This is a not-for-profit organisation. You would expect once their reserves are covered they might provide assistance with premiums."

A number of the EDR schemes have now accumulated relatively significant cash reserves.

Another member John Bolton, of Squirrel Mortgages, said he too knew little about the bid. But he said he valued the scheme's current comparatively low membership fees.

But Murray Weatherston, one of FSCL's earliest members, said he was not worried. He said it seemed sensible that if other schemes were able to use the term, FSCL should be able to, too.

"They have money in the bank. If the directors think that the issue is worth pursuing, who am I to complain? Kenneth Johnston is a pretty tough nut an as a commercial lawyer I don't think he would be pursuing it if he though tit was fruitless. The issue is a competitive one - don't want the Banking Ombudsman and Insurance Ombudsman being able to use their Ombudsman status to denigrate FSCL."

The number of complaints dealt with by external dispute resolution schemes is still relatively low. Some schemes have argued for an 0800 number that would front all the schemes and direct consumers to the appropriate channel once they rang to make their complaint.

FSCL chief executive Susan Taylor said the scheme had discounted its fees to members for the last three years."Last year the discount was 15%, meaning that most advisers paid $263.50, including GST. This fee is very competitive compared with other schemes."

Tags: disputes FSCL

« FSCL mum on court bid fundingLVR restrictions to be reviewed »

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