A number of peak industry bodies have come together with a joint statement criticising the government’s proposed one stop shop for external dispute resolution (EDR).
The final Ramsey Report into Australia’s three financial sector ombudsman schemes recommends replacing the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO), and the Superannuation Complaints Tribunal (SCT) with a single scheme, the Australian Financial Complaints Authority (AFCA).
The joint statement rejecting this proposal was written by the Mortgage and Finance Association of Australia (
MFAA), the Customer Owned Banking Association (COBA), the Australian Collectors & Debt Buyers Association (ACDBA), the Association of Securities and Derivatives Advisers of Australia (ASDAA), the Australian Timeshare and Holiday Ownership Council (ATHOC), and the Association of Independently Owned Financial Professionals (AIOFP).
These bodies represent about 80% of all financial firms in the Australian market and are members of either the FOS or the CIO.
“The Associations believe the ‘one stop shop’ will undermine the fabric of external dispute resolution (EDR) in the financial services sector because, as the weight of evidence submitted by industry suggests, the continued and separate existence of FOS, CIO and the SCT is vital in ensuring accountability, innovation and cost control in EDR.”
The Ramsey review based most of its recommendations on insights from consumer advocates who represent fewer than 5% of all complaints taken to the FOS or the CIO, the statement said.
“The Associations are also disappointed in the way the Ramsay review was conducted. The panel only held two public consultations with industry, during which it refused to articulate the reasons for proposing a single monopoly scheme and failed to engage with the credible arguments put forward by the Associations.”
EDR success relies on both consumers and financial institutions trusting the scheme’s processes at a high enough level to commit to resolve their disputes through these means, the statement continued.
“Submissions made by the Associations to the Ramsay review expressed the view that a single monopoly scheme would not have the trust or support of over 80% of all financial firms represented by the Associations.”
Furthermore, a one stop shop would benefit large financial firms over smaller ones with thinner margins and lower market share which may struggle to absorb or pass on any additional costs related to the proposed scheme, the associations said.
In a submission delivered to the Treasury earlier this year, the MFAA slammed the recommendation as going against the vast majority of evidence provided, adding that it was “designed to fix a problem that does not exist”.
The proposed monopoly scheme would be focused on the needs of the big banks rather than the brokers since the former generate the most complaints, the MFAA added.
“Adverse findings from a monopoly scheme focused on the big end of town could end a broker’s business, and we don’t believe such a scheme would have the expertise to deal with disputes appropriately.”
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