The Credit and Investments Ombudsman (CIO) has rejected a key recommendation of the External Dispute Resolution Framework Review Panel for the creation of a single industry Ombudsman scheme.
The interim report, which was chaired by Professor Ian Ramsay and looked into Australia’s three financial sector Ombudsman schemes, suggested there be a single industry body for financial, credit and investment disputes (except superannuation disputes) that replaces the CIO and the Financial Ombudsman Service (FOS).
The CIO said the suggestion was pro big bank at the expense of non-bank financial service providers and small business customers.
“Not only did the Ramsay review fail to make the case for its proposed single Ombudsman scheme, it ignored the weight of evidence that small businesses would be better served by their own limited scope statutory tribunal for disputes outside the existing remit of CIO and FOS,” said Raj Venga, CEO of the CIO.
He accused the recommendation of being a “political compromise” that would create a “new giant quasi-regulatory bureaucracy” geared towards large institutional players such as banks and insurers, despite these businesses attracting the vast majority of complaints.
“This is a solution looking for a problem,” he said.
Punishment for brokers
Other industry submissions to the Ramsay review have also expressed similar sentiments about the proposed single Ombudsman scheme.
The Mortgage & Finance Association of Australia (
MFAA) was softer than the CIO in its wording, expressing its wish to merely limit the body’s reach to the major banks.
“It is only reasonable that the potential scope of such a ‘tribunal’ should be limited to the big four banks and/or large lenders,” said Chris McRostie, MFAA’s interim CEO in the association’s submission.
“To do otherwise would punish the vast majority of the participants in the sector (including the 12,800 mortgage broker businesses and members of the MFAA) who have done no wrong.”
McRostie continued, saying that the CIO and FOS currently met consumer and stakeholder objectives “effectively and efficiently” while both reviewing and considering complaints against mortgage and finance brokers.
A government U-turn
The Coalition has also distanced itself from the idea of a single industry Ombudsman. In an interview with
The World Today, Financial Services Minister Kelly O'Dwyer clarified Prime Minister Malcom Turnbull’s earlier statements that the government was working towards “one tribunal” to handle customer complaints.
“When the Prime Minister was talking about a ‘tribunal’ he was talking about a small ‘t’ tribunal, which was a catchall for having a one-stop consumer complaints stop,” O’Dwyer said.
“One is far more legalistic, which means it is probably less consumer friendly and that is a ‘big t’ tribunal. That makes it more difficult for consumers to engage, which is what the report has found.”
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