Banks try to work through any problems with customers; but it’s important that customers have the ability to have their complaints heard outside of the bank, and that it’s easy to do so.
External dispute resolution
The Federal Government’s review of the external dispute resolution system (Ramsay Review), announced in August 2016, is an important opportunity to simplify the system, create a one-stop-shop and make it easier for customers who can’t access the formal legal system to get a fair hearing.
At the moment there are three main organisations that handle financial services disputes – the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal.
If there was just one place to go to get a dispute handled or to be pointed in the right direction to get a dispute dealt with, this would help customers get disputes resolved faster. It would also make the process much easier as customers would know exactly who to turn to for help.
You can read the industry’s latest submission to the Ramsay Review here.
When a large number of customers are affected by a problem, banks should make sure the process to fix it is transparent, efficient and fair. The banking industry has adopted the Australian Securities and Investment Commission’s guidance on addressing large scale problems in relation to financial advice. We support the application of the principles in the guidance to any large scale problem at a bank.
Last resort compensation scheme
Banks and other financial services providers have an important role in looking after the financial needs of Australians. We believe the industry should establish and fund a compensation scheme that covers individuals and small businesses who receive bad financial advice and have not been paid compensation awarded by an ASIC-approved external dispute resolution scheme due to insolvency or disappearance of a financial adviser. This would be where all other redress avenues have been exhausted.
We are working with the Federal Government, ASIC, consumer groups, other industry representatives and the Financial Ombudsman Service to evaluate the design of this compensation scheme.
Mr Ian McPhee is independently overseeing this initiative as part of the governance of industry reforms announced in April 2016.