The Financial Ombudsman Service Australia (FOS) deals with a range of disputes including banking, credit, loans, insurance and financial planning.
FOS provides an independent dispute resolution procedure for consumers and small businesses that are unable to resolve complaints with member financial service providers (FSP).
FOS only has jurisdiction over the matters specified in section B of the FOS Terms of Reference. We will discuss jurisdiction in a further bulletin.
Where there is jurisdiction, there are a number of steps involved in a FOS dispute.
Step 1: Lodge your dispute
You will only be eligible to lodge your dispute with FOS, if your FSP is a member. As a first step, you should check that your FSP is a member of FOS through the FOS website. You will then need to lodge your dispute online, also through the FOS website.
Step 2: Referral
When FOS receives the complaint it will refer your dispute to your FSP, giving them an opportunity to resolve the dispute with you directly.
If you have already attempted to resolve the dispute with your FSP, they will only have an additional 21 days to resolve the dispute before FOS takes further action. If the FSP was not previously aware of your complaint, they will have an extended time period of 45 days.
Step 3: Registration
If your complaint is not resolved, FOS will register your dispute and commence investigations. The FSP is required to provide FOS with an outline of its position regarding your complaint as well as all the relevant information and documents necessary to investigate the complaint.
At this stage, FOS will also consider whether it has jurisdiction to consider your dispute.
Step 4: Case management
A case management officer will be assigned to your dispute and will commence the investigation process. After reviewing all the relevant information (and seeking further information where necessary), the case officer will attempt to resolve the dispute by requiring the parties to attend a negotiation or conciliation conference.
A conciliation conference is more formal than a negotiation, involving a third party conciliator who is a professionally trained employee of FOS.
Step 6: Decision
If the dispute is not resolved by agreement between the parties, FOS will make a decision about the merits of the dispute.
FOS is not a court of law and is not bound by the same legal rules or formal technical procedures. However, in making its decision, FOS is required to be ‘fair in all the circumstances’ while having regard to legal principles, applicable industry codes and guidance, good industry practice and any relevant previous FOS decisions.
Both you and your FSP will be given an opportunity to make submissions about the dispute, which will help guide FOS’ decision.
Step 7: When should you accept the FOS decision?
At first instance, FOS will make an assessment of the dispute, called a Recommendation (unless the process is expedited because of special circumstances). If both parties accept the Recommendation within 30 days, the dispute will be resolved and the decision will become binding on both parties. If either party rejects the Recommendation, FOS will proceed to make a Determination.
A Determination is a final decision and the FSP generally has no rights to accept or reject it. You will, however, only be bound by the Determination if you choose to accept it within 30 days.
If you reject the Determination or do not accept it within 30 days, it will not be binding on either party and you may proceed to take the matter to court – provided you are not out of time to commence court proceedings.
It is important to be aware that, by accepting a FOS Recommendation or Determination, you are accepting full and final settlement of the dispute. The courts have taken a reasonably strict approach to reviewing FOS decisions and will only do so in circumstances where the decision was reached as a result of bad faith, bias, dishonesty or breach of natural justice.
If you are not satisfied with the FOS Recommendation or Determination, it is critical that you do not accept or reject it before first seeking legal advice.