Victims of financial scandals need simple justice – response to Ramsay EDR Review
Following the slew of financial scandals Australians have faced in recent years, consumer advocates say that Australians need simple and accessible justice with reformed Ombudsman services.
The Review of the Financial System External Dispute Resolution and Complaints Framework (Ramsay Review), led by Professor Ian Ramsay, today released its interim report. In response to the review, Consumer Action Law Centre, Financial Rights Legal Centre and Financial Counselling Australia are supporting calls to form a single ombudsman scheme for financial, credit and investment disputes to replace the Financial Ombudsman Service and the Credit & Investments Ombudsman.
“Getting justice is still too confusing for most Australians” says Gerard Brody, CEO of Consumer Action Law Centre.
“We strongly support the role of Ombudsman schemes in getting Australians justice. They’re free, independent and ideally a quick way to resolve problems. Currently Australians are faced with the confusing situation where their complaint could be handled by either the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO). Merging these schemes is a common sense move that can help Australians get justice.”
The interim report also recommends replacing the Superannuation Complaints Tribunal with an industry ombudsman scheme for superannuation disputes.
“People with superannuation disputes should have access to the benefits of an Ombudsman scheme”, said Kat Lane, Acting Coordinator of Financial Rights Legal Centre. “An Ombudsman service is free, flexible and fast compared to the stilted, slow and inflexible Superannuation Complaints Tribunal”.
The Ramsay Panel rejected the need for a new statutory tribunal in the finance and banking sector, strongly welcomed by the consumer advocates.
“A legalistic tribunal is not the answer – Ombudsman schemes can deliver access to justice and, importantly, take action in relation to systemic issues and serious misconduct in the finance sector”, said Ms Lane. “A banking tribunal would do nothing to fix the underlying causes of consumer harm”.
The Senate this week launched an inquiry into banking rip-offs and bad behaviour. The broad terms of reference will allow the Senate Inquiry to consider issues of culture, commission and incentives, and the impact of failures in consumer protection.
“The new Senate Inquiry is another important opportunity to really put the experiences of financial scandal victims front and centre” says Mr Brody.
“The Ramsay Review and this new Senate Inquiry should have one shared aim – help Australians be heard and get justice.”
Response to recommendations
- Consumer Action supports the formation of a single ombudsman scheme for financial, credit and investment disputes to replace the Financial Ombudsman Service and the Credit & Investments Ombudsman.
- A last resort compensation scheme (compensation for victims of bad advice who are not covered by insurance) is a vital piece in getting justice for victims of financial scandals. The Review recognised that such a scheme has considerable merit, and consumer advocates urge that such a scheme is developed to provide compensation to those who need it.
- Higher monetary limits and compensation caps will mean that more people will be able to be served by the ombudsman schemes.
- More frequent independent reviews of the new ombudsman schemes will mean that the schemes continue to improve over time.
Media Contact: Jonathan Brown, 0413 299 567, email@example.com
Available for comment:
- Gerard Brody, CEO, Consumer Action Law Centre
- Kat Lane, Acting Coordinator, Financial Rights Legal Centre
Quotes attributable to Gerard Brody, CEO Consumer Action Law Centre:
On the Ramsay EDR Review:
“Mandatory external dispute resolution schemes in many sectors has been one of the greatest advances in consumer protection in the past 20 years. Ombudsman schemes provide free, fair and legally binding resolutions for people without the cost and hassle of legalism.”
“Dispute resolution in the finance sector must be enhanced to improve access to justice and keep financial institutions to account. New ombudsman schemes will deliver on this.”
On a last resort compensation scheme:
“Too many investors have lost money following unethical or misleading financial advice, and are unable to get compensation if their financial advisor becomes insolvent. People who’ve been exploited shouldn’t be left to pick up the pieces. We’re talking about families losing their home and driven to poverty.”
“We strongly urge the establishment of a statutory compensation scheme of last resort. This will means that Australians won’t be left out of pocket after bringing a successful ombudsman complaint against a financial service provider that doesn’t have the funds to pay up. A compensation scheme will show that the Government and industry don’t want to leave people behind, and improve trust in the financial sector.”
On the Senate Inquiry into Banking Rip-Offs:
“Too many Australians have suffered as a result of misconduct in the banking, insurance and financial services sector. The new Senate Inquiry is a timely opportunity to get the root of the problems in this sector.”
“We’ve helped many people who’ve been ripped off by irresponsible bank lending, junk insurance, and debt vultures. It’s time to plug the regulatory gaps and stop the rorts. We need to focus on how we can better prevent Australians falling victim to poor conduct in the finance sector, and how we can bring greater integrity and fairness to the culture of our big banks.”