Merger of external dispute resolution schemes
When providing a financial service to retail clients financial services licensees are generally obliged to have both internal and external complaints dispute resolution mechanisms in place to handle complaints from clients. The external process must be approved by the Australian Securities and Investments Commission (ASIC).
ASIC has recently approved the new Financial Ombudsman Service (FOS). FOS will represent the merger of the three biggest complaints schemes operating in the financial services industry – the Financial Industry Complaints Service (FICS), the Banking and Financial Ombudsman Service (BFSO) and the Insurance Ombudsman Service (IOS).
The new service will be operational from 1 July 2008.
What do I need to do?
Existing members of each respective service should by now have received a membership transfer form, transferring their current membership to FOS. Existing pricing structures for each industry type remains in place, however it is expected that a new uniform pricing structure will be in place before 1 January 2009. Applicants applying before then will need to sign up to FOS under their current industry structure.
For a financial services licensee, various disclosure documents, including product disclosure statements (PDS) and financial services guides (FSG) are required to contain information about the dispute resolution procedures available to the investor.
In order to facilitate the transfer to FOS, an application for relief has been lodged with ASIC so that references to existing dispute resolution services in existing disclosure documents (pre 1 July 2008) eg to FICS, will be deemed to be a reference to FOS. The relief would apply until the earlier of a reprint of the document or 30 September 2009.
This relief is still pending and is expected to be granted shortly although the final form and conditions attached to the relief is not certain at this stage. Members of the existing services will be notified of the steps to take based on the actual terms of the relief.
Meanwhile, redirection services have been set up for the email, website and postal addresses of the merged services to be redirected to those of FOS (details below). The phone numbers remain the same.
The relief being sought is expected to ONLY APPLY to printed material (eg it does NOT apply to documents in “word” format). Accordingly, it is likely that all disclosure documents in word (or similar) format will not be able to rely on the relief and WILL need to be amended to reflect the new contact details (below) before 1 July 2008.
Going forward, the contact details will be:
FINANCIAL OMBUDSMAN SERVICE
Reduced burden for managed investment schemes
As of 4 June 2008, the Corporations Amendment Regulations 2008 (No. 1) (Regulations) has removed the requirement for managed investment schemes to notify ASIC of their top 20 interest holders each year as part of the annual review process. The Regulations align the treatment of registered schemes with the treatment of public companies as introduced in an amendment last year. The motivation behind this change is to reduce ASIC’s administrative workload and the limited benefit received from this requirement, given the rate of change of interest holders.
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