The Mortgage & Finance Association of Australia has rejected key elements of the Ramsay Review’s interim report on external dispute resolution (EDR).
The report recommends a single industry Ombudsman scheme for financial, credit and investment disputes – excluding superannuation – to replace the Credit and Investments Ombudsman (CIO) and the Financial Ombudsman Service (FOS).
The MFAA has argued that while a single scheme may be beneficial for the largest financial services providers, it would be a negative outcome for tens of thousands of small businesses and financial services providers, including mortgage brokers.
MFAA chairman Cynthia Grisbrook said the report did not make a convincing case for change, ignoring the huge benefits that the competitive environment for EDR schemes has delivered in terms of innovation and customer outcomes.
“We find in our work that the CIO performs a relevant EDR service focusing on smaller financial services providers, since it deals with our providers every day. As a broker myself, I have no confidence that a mega scheme would serve the needs of consumers and small businesses seeking mediation on issues as they arise,” Ms Grisbrook said.
“Forcing our members to join a massive, slow bureaucracy would mean they would have to contribute to a scheme that would do little to help them resolve disputes.”
Ms Grisbrook added that a single EDR scheme would focus on the needs and mediation practices of the larger financial service providers, “since they generate the most complaints and would pay the bulk of the new scheme’s fees”.
The MFAA encouraged the Ramsay Review’s panel to consider the needs of all Australian financial services providers, in the interests of fostering competition and a robust financial services sector.
“We would like to see the needs of consumers and small businesses served by creating an effective set of policy recommendations around dispute resolution, not simply the creation of a new massive complaints bureaucracy,” Ms Grisbrook said.
[Related: Credit Ombudsman responds to FCA survey]
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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