The tension in EDR schemes between the members who pay for the scheme and consumers who use the scheme free of charge usually manifests itself in complaints by members about costs and delays.

The 2013 Independent Review of the Financial Ombudsman Service has now been released. This is the first review following the merger of 5 predecessor schemes into FOS.

It found FOS, an ASIC-approved EDR scheme, meets all of ASIC’s requirements, except in efficiency and timeliness.

The review recommended steps be taken to clear the current backlog and to become more efficient in the future.

It also recommended FOS review its approach to financial difficulty disputes to produce a more timely resolution including:

• greater preparedness by FOS to decline to continue to consider a dispute particularly if:
  the lender has reasonably fulfilled its obligation to try and accommodate the applicant;
  the Applicant without reasonable excuse fails to provide a Statement of Financial Position or meet other4 FOS requests; or
  the application is by a small business and relates to large sums of money and raises complex issues that are more suited to resolution in the courts.
• more proactive assessment by FOS as to whether a proposed hardship variation is likely to be viable.