FBAA supports government’s dispute resolution scheme, whilst the MFAA warn it could favour big banks
FBAA supports government’s dispute resolution scheme, whilst the MFAA warn it could favour big banks
Broking’s industry associations have taken two very different stances on a single external dispute resolution scheme proposed by the government.
On Tuesday the MFAA called for a continuation of the status quo, where most brokers are members of the Credit & Investments Ombudsman (CIO) and most banks part of the Financial Ombudsman Service (FOS). A joint statement by the MFAA, Customer Owned Banking Association and others warned that “large financial firms, who are members of FOS, will be the main beneficiaries of the single ombudsman monopoly.”
The FBAA has taken the opposite view, with executive director Peter White announcing on Thursday that: “the amalgamation of the Financial Ombudsman Service (FOS), the CIO and the Superannuation Complaints Tribunal (SCT) will improve systems that will lead to better consumer outcomes.”
White claimed the proposed Australian Financial Complaints Authority (AFCA) could result in faster turnaround times for cases. As well as the federal government, the Australian Bankers Association and a number of consumer bodies are in favour of a single dispute resolution scheme.
Brokers currently account for just 6.3% of complaints received by the CIO (299 complaints in 2016) and it is feared that in, a combined EDR scheme, smaller organisations such as brokers could end up subsidising the banks who have a far larger number of complaints. The MFAA statement also warns that smaller and more innovative firms could be weighed down by the increased cost of such a scheme.
However according to FBAA boss White “There is no evidence at all to support those claims.”
If implemented, as the Government intends, the AFCA will deal with all complaints from 1 July 2018 and existing EDR schemes will work only on already-existing cases. Financial firms will be required to be part of the AFCA - at present all brokers must be signed up to at least one EDR scheme.
Failure to act with due skill, care and diligence 12.3%
Inappropriate finance, including responsible lending 11.5%
Complaint about the credit provider’s fee or interest rate 10.0%
Failure to follow instructions 8.1%
Misrepresentation/misleading conduct 6.6%
Delay 5.7%
Incorrect listing on credit report 5.3%
Brokerage fee disputed 5.1%
Poor customer service 4.9%
Financial hardship 3.6%
Source: CIO, Annual Report on Operations 2015-16
