Issue

FOS

Court proceedings

Monetary limit

$150,000 per claim

No monetary limit on compensation

Parties to claim

Claim only against members of FOS

Claim against all possible defendants irrespective of membership of external dispute scheme

Grounds for claim

Typical grounds for claim include:

·         breach of contract;

·         negligence;

·         breach of Corporations Act 2001; and

·         breach of Australian Securities and Investments Act 2001

Typical grounds for claim include:

·         breach of contract;

·         negligence;

·         breach of Corporations Act 2001; and

·         breach of Australian Securities and Investments Act 2001

Cost of claims

Less than court proceedings as procedure governed by the FOS Terms of Reference.

More expensive than costs in FOS, but difficult to predict, as it depends on the complexities and the conduct of the defendants and on the expert evidence that may be required to quantify the economic loss suffered.

General timing and procedure

Claim made, FOS member asked to respond, submissions made by parties and determination made by FOS (up to 12 months)

Difficult to determine but could be 2 years or more depending on issues of:

·           expert evidence on quantum of loss;

·           discovery of documents;

·           subpoenas to be issued;

·           lay evidence; and

·           any cross claims by the defendants.

Effect of decision

Decision of FOS is binding on the FOS member but not on the complainant.  The FOS member not having any rights to appeal the merits of the decision.

Decision binding on all parties.  Appeal possible by any party.

Worst case scenario for the client

FOS deny claims in full and client pays own legal costs, but client can still commence court proceedings after FOS determination if the client does not accept the FOS decision.

Claims unsuccessful, no damages awarded and the client may be ordered to pay the legal costs of the defendants plus the client’s own costs.

Best case scenario for the client

FOS accepts claims by and compensation is ordered, with the client paying their own legal costs.

Damages awarded for losses plus interest and the defendants are ordered to pay the client’s costs