25/06/2009

Recently, the FOS Board approved proposed changes to it's Terms of Reference which could see an increase in the maximum accepted claim to $500,000 which a consumer can lodge with FOS against a financial service provider.

The Financial Ombudsman Service (FOS) is an independent body that attempts to resolve disputes between consumers and FOS members (participating financial services providers). FOS covers complaints about financial services including banking, credit, loans, general insurance, life insurance, financial planning, investments, stock broking, managed funds and pooled superannuation trusts.

At present, the jurisdictional limit on claims to FOS for funds management, stockbroking, investment and financial advice is $150,000.

On 30 May 2009, the FOS Board approved revised Terms of Reference which has now been submitted to ASIC.  The revised Terms of Reference include changes to the jurisdictional limits, such as increasing the awards limit cap for complaints against financial service providers to $280,000 by January 2012 and an acceptance of claims up to $500,000.  That is, although a claim will be accepted up to $500,000 FOS will only be able to award a maximum $280,000.

A summary of some of the important revised Terms of Reference are as follows:

1. Time for a complaint to be lodged with the FOS - is within 6 years of the complainant becoming aware of the loss that has been suffered, and within 2 years of the complainant receiving an IDR Response from the FOS member. 
   
   
2. Rules of Evidence – the legal rules of evidence do not apply to complaints to the FOS.
    
3. Types of disputes FOS can consider – include a contract claim that relates to the provision of a Financial Service by a member of the FOS.  A financial service being defined as including a service that is financial in nature in connection with a financial investment or financial or investment advice.  Even if the dispute does not fall within one of the defined categories FOS may deal with it if the parties and FOS so agree. 
   
   
4. Types of disputes outside of FOS’s jurisdiction – include the following:

a.    the claim exceeds $500,000;

b.    confidentiality or privacy obligations (some exceptions);

c.    investment performance of a financial investment, except non-disclosure or  misrepresentation;

d.    relating to the management of a fund or scheme as a whole; or

e.    the dispute has already been dealt with by a court or dispute resolution tribunal or scheme approved by ASIC.

If you have any questions in regard to FOS complaints, please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.