One of Australia’s leading insurance lawyers has told Lawyers Weekly that the Financial Ombudsman Service lacks sophistication and resources.
Wotton + Kearney partner Cain Jackson (pictured) spoke to Lawyers Weekly ahead of a Thought Leadership breakfast on consumer protection regulation in Sydney on 26 September.
Jackson, a member of the six-man panel, said the Financial Ombudsman Service (FOS) does not provide a fair forum for hearing large-scale disputes.
“My sense is they are still under-resourced and the jurisdictional limit is still far too high for the lack of sophistication and lack of procedural certainty that is provided by the service,” said Jackson. “I don’t think the terms of reference have kept up with the nature and complexity of the disputes they are now hearing.”
FOS provides a forum for member financial services providers to resolve disputes with consumers or small businesses.
Almost 17,000 financial service providers are members of the scheme, with its dispute resolution process also covering disputes in the banking, general life insurance and financial planning sectors, in addition to managed funds and pooled superannuation trusts.
Its maximum award amounts are $150,000 for general insurance broking disputes and $280,000 for investment disputes and all other disputes under its terms of reference.
“I don’t think it is the appropriate forum to hear claims of $280,000,” said Jackson, who added he often acts for clients where disputes heard by FOS aggregate to values in excess of $1 million.
“Its major driver is access to justice, and I understand that, but there is a point at which the quantum involved must be met with a greater degree of sophistication, and I don’t think the terms of reference have kept up with the nature and complexity of the disputes they are now hearing.”
FOS decisions are binding on the member but not binding on the claimant.
Nicolas Crowhurst, the company secretary at FOS, will be joining Jackson on the panel at the Thought Leadership breakfast at Sydney’s Amora Hotel on 26 September.
The other panellists will be Christina Kalantzis from Alexis Compliance and Risk, Michael Herron from Catlin Australia, Premium Wealth Management CEO Paul Harding-Davis and Louise Macaulay, the senior executive leader of the financial advisers team at ASIC.
Macaulay and Jackson will be delivering the two keynote addresses at the Conference.
Tickets are still available and can be purchased here.
Advisors’ heads on the block
In addition to looking at the FOS process, the panel will also address issues such as who is responsible for the advice of failed dealer groups and whether advisors should be responsible for advice regarding produce failure.
Jackson said that while financial advisors are liable for product failure where their advice is deficient, “debate still rages” around aspects of ASIC’s Know Your Client Rule.
“That rule covers the liability of advisors,” he said.
“The way I put it is loss does not equal fault, there has to be something in between that connects the decision of the investor or their client to invest in that product.”