The panel conducting the review of the financial system’s external dispute resolution and complaints framework has released an issues paper for comment.

The panel has been asked to examine the Financial Ombudsman Service (FOS); the Credit and Investments Ombudsman (CIO); and the Superannuation Complaints Tribunal (the SCT) ‘to consider whether changes to current dispute resolution and complaints schemes in the financial sector are necessary to deliver effective outcomes for users in a rapidly changing and dynamic financial system.’

The issues paper overviews the current schemes and includes a useful table which summarises and compares key features of the existing EDR schemes and complaints arrangements. It raises issues with respect to gaps and overlaps in existing EDR schemes and complaints arrangements.

It also discusses the following options:

• to overlay a ‘triage’ service on existing schemes. Under this model, a one-stop shop would provide a single point of entry for dispute resolution for consumers, with information passing behind the scenes to the correct scheme. It would not require any changes to the resolution schemes themselves, merely a single application point for consumers, where notifications would be sent to the correct scheme. After making contact, consumers would be provided with information about how to pursue their complaint with the financial firm involved and they would also be referred to the dispute resolution scheme which was most appropriate for them.
• creating one entirely new body, or integrating the existing schemes and arrangements, which would hear all consumer disputes in the financial system. As well as lessening consumer confusion, such a model would have the potential to simplify the overall framework, enhance consistency in outcomes and decision-making processes and reduce administration costs for regulators.
• A tribunal to deal with disputes relating to small business lending. Because the National Consumer Credit Protection Act 2009 does not apply to loans for business purposes, lenders that do not provide consumer credit are not required to hold an Australian credit licence and are therefore not required to belong to an EDR scheme. A tribunal could potentially have powers to make determinations in some or all of these matters. Another potential role for a tribunal would be as an alternative to court action for a complainant who is not satisfied with a determination made by one of the existing EDR schemes. The extent to which a new forum could enhance the existing framework and improve outcomes for users would depend on its design and how it would fit alongside existing dispute resolution schemes.
• the establishment of a statutory compensation scheme of last resort that could assist consumers in these circumstances. Although EDR scheme determinations are binding on the member, losses may go uncompensated where the firm is insolvent, does not have adequate PI insurance or when PI insurance does not respond to all claims.

The submissions the panel receives will be considered in its interim report, which will be released at the end of November 2016. The panel will provide its final report to Government by 31 March 2017.