Australia’s financial counsellors have thrown their support behind the proposed merger of the Financial Ombudsman Service and the Credit and Investments Ombudsman into a ‘one-stop’ financial complaints ombudsman service.
A recent survey by Financial Counselling Australia (FCA) found 75 per cent of financial counsellors supported a merged ombudsman service.
FCA conducted the survey to inform the joint consumer submission to the current review of external dispute resolution schemes (the Ramsay review).
Financial counsellors were also asked to rate their experience with FOS and CIO in the past 12 months on a scale of 1-10, where 1 was really bad and 10 was really good. FOS received higher ratings compared to the CIO, with a weighted average ranking of 7.8 for FOS versus 5.8 for the CIO. Many financial counsellors had not interacted with CIO, however, and did not provide a rating.
“A common theme in the comments from financial counsellors was that it was confusing to have two schemes and that a one-stop shop made sense,” FCA chief executive Fiona Guthrie said.
“There were concerns, however, that any merger should be about genuine benefits and not just a cost-cutting exercise.
“No financial counsellor suggested that competition between external dispute resolution schemes was a good thing, which has been one of the main arguments put by those advocating for the status quo,” she said.
The FCA argues that while competition between financial services providers is to be encouraged “it does not make sense when applied to dispute resolution schemes, which are free, accessible alternatives to the courts”.
“The existence of ‘competition’ between schemes can in fact be detrimental, leading to forum shopping and raising concerns about bias,” Ms Guthrie said.
“FCA and the seven other consumer groups involved in the joint consumer submission to the Ramsay review, have been very clear, for many years now, about the benefits of a single ombudsman for financial services complaints,” she said.
The FCA noted that this is already the case in telecommunications and in state-based energy and water ombudsman schemes.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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