Australia's shadow minister for financial services, Mathias Cormann, has acknowledged that there are legitimate concerns over procedural matters and natural justice in relation to Australia's Financial Ombudsman Service (FOS) and the Credit Ombudsman Service (COS).
The term 'ombudman' derives from Swedish and means an independent official who addresses complaints by investigation and attempts to resolve matters without litigation, usually between customers and organisations. Traditionally deployed to handle complaints and grievances by the general public, the use of ombudsmen has increased in scope and sophistication in recent years.
The FOS and COS have been in place since 1 July 2008, and are due for review in July 2013. "If we are elected to government at the next election, then we will certainly be conducting a review consistent with the Productivity Commission recommendation to assess how the current process is operating" Cormann said.
Currently, FOS is a private law body that planners must become a member of to comply with the conditions of their Australian Financial Services Licence. Although planners enter into a contractual agreement with FOS, the organisation can unilaterally change its terms of reference over the contract cycle, including making retrospective changes. In addition, planners who are unhappy with a FOS decision cannot appeal via the Administrative Appeals Tribunal but must go to the Supreme Court.
FOS Chief Ombudsman Shane Tregillis has defended the system, stating that the organisation consulted widely with the industry when it originally drafted its terms of reference, and continues to do so when they are amended. "A number of amendments have been made to the terms of reference since its inception. All of these have been through stakeholder consultation processes and are subject to ASIC Australian Securities and Investments Commission approval" he said.
It is widely understood that a future ombudsman should be a government body, although this will need to be fully explored and the views of stakeholders taken on board during the 2013 review.
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