Getting problems with your bank, insurance or finance company solved fairly and quickly is too hard and Australia needs a one-stop-shop ombudsman for financial service problems, say leading consumer advocates.
In a submission endorsed by eight consumer organisations provided to the Ramsay Review into External Dispute Resolution in the banking and finance sector, advocates have urged the Government to abandon talk of a banking tribunal and to enhance the existing Financial Ombudsman Service to cover all banking, insurance and finance complaints.
The Carnell report into banking practices, released today, similarly recommended an industry-funded external dispute resolution one-stop-shop that should also be able to deal with small business disputes.
“We need a one-stop-shop Ombudsman scheme” says Gerard Brody, CEO of Consumer Action Law Centre.
“Currently if you have a problem with a bank or finance provider, it is incredibly confusing to fix the problem. The people who call our services just want to get their lives back on track – the Government can help them by simplifying the system and giving it teeth. Our submission to the Ramsay Review supports a single comprehensive Ombudsman scheme to cover a broader range of issues and greater powers to award compensation.”
In their joint submission to the Ramsay Review, consumer advocates are calling for:
- A one-stop-shop Ombudsman scheme for all disputes in the banking and financial sectors.
- The Government to dump plans for a legalistic banking tribunal.
- Increasing the amount of compensation that the Ombudsman can award to $2 million.
- Increasing the coverage of the Ombudsman scheme to disputes about lending for small business and managed investment schemes, as well as complaints about debt management firms.
Mr Brody also welcomed the announcement from Minister for Financial Services Kelly O’Dwyer that she had extended to the terms of reference for the Ramsay Review to make recommendations relating a compensation scheme of last resort.
“Those that lose money because of the actions of a financial service provider should be compensated. Where the provider goes out of business, a compensation scheme can ensure that the actions of a financial service provider doesn’t leave someone in poverty or at risk of losing their home”, says Mr Brody.
The joint submission made the following recommendations in relation to a compensation scheme:
- The scheme should cover all financial service providers, including managed investment scheme operators and credit providers, not just financial advisors.
- The scheme should be retrospective, and include a mechanism to compensate those with existing awards from the Financial Ombudsman Service that have not been paid.
- The scheme should cover all future awards made by the ombudsman or courts.
Consumer advocates who have contributed to the Ramsay Review joint submission includes:
- Consumer Action Law Centre
- Care Inc Financial Counselling Service and the Consumer Law Centre of the ACT
- Caxton Legal Centre
- Consumer Credit Law Centre SA
- Consumer Credit Legal Service (WA) Inc
- Consumers’ Federation of Australia
- Financial Counselling Australia
- Financial Rights Legal Centre
The submission will be available publicly soon.
This article has been republished from a Consumer Action Law Centre media release, available here