Monday, February 27, 2017 - Posted by Michael McCulloch
The Financial Ombudsman Service
("FOS") has released their October to December 2016 quarter statistics.
A total of 9,604 disputes were received during this period which is a decrease of 1% compared with the last quarter and a 26% increase compared with the same quarter last year.
Disputes Received by Product Line
41% of disputes received in the October to December 2016 quarter were credit related. 31% of disputes related to general insurance.
5,580 disputes were received for the October to December 2016 quarter. This was a 4% reduction compared with the last quarter and a 9% increase compared to the same quarter in 2015.
Credit and insurance disputes accounted for the majority of accepted disputes (40% and 37% respectively).
Disputes Closed by Outcome
A total of 9,820 disputes were closed during this quarter (the highest number of disputes closed in a quarter in the last 3 years).
Almost 60% of disputes were resolved through an agreement between the FSP and the consumer compared to last quarter(2% decrease). Of those closed disputes 16% were outside of FOS's jurisdiction and 10% due to the consumer not pursuing the dispute.
Tuesday, December 13, 2016 - Posted by Michael McCulloch
A recent report, released exclusively to ABC News, has now recommended that the Government establish a new ombudsman to replace both the Financial Ombudsman Service
("FOS") and the CIO.
Prime Minister, Malcolm Turnbull, said on 7 October, "We will get a low cost, speedy tribunal to deal with these types of consumer complaints, customer complaints against banks". The Government, at this stage, is indicating that a single tribunal will be established as a "catchall for having a one-stop consumer complaints stop [sic]".
The comments by Mr Turnbull came amid appearances by CEO's of the big 4 banks before a parliamentary committee. It was a recommendation by the committee that, if required, a Banking and Financial Services Sector Tribunal be setup prior to 1 July 2017. Any such tribunal would replace both FOS and the CIO with the tribunal being funded by the banks and being backed by legislation.
We will continue to monitor and report on these changes as they are released.
Wednesday, November 23, 2016 - Posted by Michael McCulloch
We recently received communication from the Credit and Investments Ombudsman ("CIO") that they've received reports about Financial Service Providers ("FSP's"), particularly in Queensland, filing police reports about items under lease or finance as being stolen when payment isn't received.
The action taken by the FSP's is under the Criminal Code 1899 (QLD) however the CIO remind FSP's that enforcement rights are available under the National Credit Code which would be more appropriate when enforcing a regulated credit agreement due to non-payment.
In one example a customer made a complaint to CIO, which should stop enforcement action, however the FSP argued that it was now a criminal matter and outside of the CIO's jurisdiction. CIO in response indicated that police involvement comes with a broad definition of enforcement and activity should cease while the complaint was being considered.
It remains unclear at this stage as to the final outcome of the investigation by CIO regarding the above example however as CIO have indicated, stopping a criminal investigation would prove to be very difficult and that involving police in a regulated credit agreement is not an industry best practice.
Sunday, October 30, 2016 - Posted by Philip Harvey
The National Consumer Credit Regulations 2010 Reg 36 - provide that when commencing Court proceedings they must be commenced in the State or Territory where the debtor ordinarily resides.
(3) Subject to sub-regulation (4), a court proceeding must be brought in a court of the State or Territory where the debtor, mortgagor or guarantor ordinarily resides, if the court proceeding:
(a) is in relation to:
(i) a credit contract; or
(ii) a consumer lease; or
(iii) a mortgage; or
(iv) a guarantee;
Regulated under the Act; and
(b) involves a debtor, mortgagor or guarantor.
Sub-regulation 4 however does permit Court proceedings to be commenced in another State or Territory where the Contract was entered into if the whereabouts of the debtor is not known.
In the January 2016 Systemic Issue Update released by the Financial Ombudsman Service ("FOS") it was highlighted that a FSP who had commenced proceedings in a jurisdiction where the debtor did not reside was required to go back through past proceedings and issue a Notice of Discontinuance or set aside proceedings to correct the issue.
We have noted on several occasions that accounts have been referred to us for collection where there are breaches of The National Consumer Credit Regulations 2010 Reg 36 and the Systemic Issue identified by FOS. We recommend that where you engage an agent or Solicitor to act for you that you take all necessary steps to identify that proceedings are being commenced in the correct jurisdiction to avoid complication in recovering your debt using the legal system.
LCollect is compliant with The National Consumer Credit Regulations 2010 Reg 36 and electronically files documents in most Courts and Territories across Australia on a daily basis.
Please note that this article is not intended to be legal advice.
Monday, August 22, 2016 - Posted by Michael McCulloch
In the Winter edition of The FOS Circular the Financial Ombudsman Service Australia ("FOS") has released their quarterly statistics.
Compared to the last quarter FOS are reporting a 9% increase in disputes and overall a 22% increase compared to the same quarter last year.
Total Disputes by Product Line
42% of disputes received for the quarter were credit disputes with general insurance disputes account for 30%.
5,585 disputes were accepted by FOS for the quarter which was an increase in 13% compared to last quarter. Compared to the same quarter last year this represented a 1% decrease.
8,741 disputes were closed this quarter which, compared with last quarter, was a 14% increase and a 2% decrease compared to the same quarter last year.
Closed Disputes by Outcome
52.8% of disputes referred were resolved by the FSP with 15.8% of disputes outside of FOS's Terms of Reference.6.3% of disputes were discontinued (potentially meaning that the consumer did not proceed with the complaint)
All graphs and tables are courtesy of FOS.
Wednesday, April 27, 2016 - Posted by Philip Harvey
In 2015 we saw the Credit & Investments Ombudsman introduce charging for systemic issues.
The CIO provided numerous investigate outcomes including:
- A low value lender waived debts or refunded fees having failed to meet responsible lending obligations
- More transparency on enforcement costs incurred that are passed on to consumers
- A credit license holder failing to commence proceedings in jurisdictions where the consumer did not live
- An Internal Dispute Resolution process being updated removing the requirement that a dispute be lodged in person
Read the latest CIO Consumer News here
Wednesday, April 27, 2016 - Posted by Philip Harvey
In Australia, the Treasurer has announced that the government establish a panel to advise on consolidation of disputes and complaints function pertaining to External Dispute Resolution.
The full announcement from the Treasurer is below:
The Government will establish a panel of eminent persons to review the role, powers and governance of all of the financial system’s external dispute resolution and complaints schemes and will assess the merits of better integrating these schemes to improve the handling of consumer complaints. This Panel will report back to the Government by the end of 2016.
The Government is keen to ensure that the user experience of complaint handling services is smooth, simple and fair. The Government shall explore the possibility of having a one-stop-shop for handling consumer disputes and complaints
Read the media release here.
Friday, June 26, 2015 - Posted by Philip Harvey
With the conclusion of the financial year upon us, it is a good opportunity to reflect on the past 12 months and give some insights from our perspective into the industry, and reflect on some of the milestones and changes to the industry:
- The CIO's (previously COSL) refusal to deal with certain credit repair companies. This was a welcome change of approach. However we note that a majority of our consumer credit clients / AFSL licensed clients are members of FOS. To our knowledge this approach has not been replicated with FOS. It will be interesting to see how legislators and regulators deal with this space moving forward. The ACCC has also identified this in its research report into the industry.
- Feedback from our clients is that competition to lend money is fierce at all levels. Those successfully marketing to their target market / niche are able to grow their lending portfolios.
- Generally arrears provisions are down. With interest rates at prolonged historical lows, clients are reporting exceptionally good arrears results. A large proportion of accounts that do get written off are bankrupts where no previous indication of financial distress was know with no opportunity to identify an account in hardship to assist the borrower. This is also reflected in historically low volumes of actions through the various courts. Interestingly in the courts, they are also experiencing a reduction in insurance claims.
- In December, a number of our clients for the first time initiated policies of halting all collection action (excluding phone calls, contact and reminder letters) in the lead up to Christmas, with instruction not to recommence until varying times in January. The principle reason cited for this was brand management and brand protection. (The natural flow on from this can be delays of 6-8 weeks in a matter such as obtaining vacant possession of a property which may raise other issues).
- In our commercial collection space, for new clients our biggest issue continues to be clients not correctly setting up their lines of credit, not performing basic company searches, director searches to properly inform themselves as to who they are dealing with. When these searches are performed and guarantees are taken, an asset search of the director is not undertaken to actually understand the benefit of the Directors Guarantee. What appears at first glance to be a good collection prospect unravels quickly once the proper searches are undertaken. Similar to consumer credit, some clients are experiencing no warning of clients financial distress until the appointment of a liquidator.
- The ACCC research paper into the debt collection industry is a must read for all parties in credit control and debt collection. We raised this last month, you can download a copy on this link.
- In NSW, the Government released its report into debt collection, and QLD commenced a negative license regime for phone collectors in QLD.
- The ACCC and ASIC published a new guide to Debt Collection in July 2014. This provided new guidance in handling emerging technologies.
- The Privacy Principles were updated.
Remember that if you would like to see more articles like this in the future please contact us so our content continues to grow and provides you with the latest in debt recovery news, tips and advice.
Thursday, May 07, 2015 - Posted by Philip Harvey
An interesting court case involving FOS disputes and a mortgage repossession showed the time delays that can occur where the ombudsman is involved. The timeline of the proceedings are reviewed below;
- April 2007: An investment loan was granted for approximately $600k .
- February 2011: Default Notice and demand served on debtors
- April 2011: Proceedings commenced in the County Court to obtain possession of the property.
- July 2011: Defence filed denying service of default notices (nothing else disputed).
- March 2012: Application made for summary Judgment.
- April 2012: At summary Judgment hearing, Judge requests affidavits be filed and served by defendants by 20 April, new hearing ordered for 24 April 2012.
- April 2014: First FOS dispute lodged.
- April 2014 to 2014 May: Seven disputes lodged with FOS. Repeated Court adjournments between these dates.
- May 2014: Summary Judgment Order granted by the County Court.
- June 2014: Appeal to Supreme Court of Victoria by defendants
- November 2014: Matter heard by the Supreme Court
- December: Judgment in favour of the financier (appeal dismissed).
From issuing a default notice to the Supreme Court's ruling is 3 years and 9 months.
The disputes lodged with FOS were detailed by the court at point 19 in the Judgment. Summarised they were;
- 2012 April: A hardship dispute resolved by conciliation conference in October 2012.
- 2013 January: A dispute as to legal fees, assessed outside FOS' terms of reference, in addition debtor had not complied with the conciliation orders.
- 2013 August: Hardship claim based on a house fire at the Property (the property was burnt down by arsonists). Complaint closed November 2013 with advice from FOS that all avenues of appeal had been exhausted.
- 2013 September: Dispute about cancellation of insurance. Closed because it was not related to the financier (rather it was the financiers insurance business, a separate legal entity).
- March 2014: Complaint about the County Court proceedings which were dismissed. Borrowers advised by FOS that FOS had not further role in the dispute (very prompt reply in the same month by FOS).
- May 2014: Dispute over a hardship refusal relating to the house fire and home insurance. FOS provided email advice to the financier on the day of the County Court hearing that the dispute was closed. On this day, Judgment was granted by the County Court.
You can view the full case here.
Thursday, February 19, 2015 - Posted by Philip Harvey
In February, the Credit and Investments Ombudsman (CIO, previously COSL) decided to take steps to no longer deal with two well-known credit repair companies as nominated 3rd party representatives. These companies will no longer be able to discuss complaints with CIO or lodge new complaints on behalf of consumers.
This was a result of a review that found these two organisations had commenced numerous complaints that:
- Were not in the consumers best interests;
- Obstructed and delayed the process; and
- Made unreasonable decisions on consumers behalf.
CIO have advised all affected consumers to contact them directly.