Financial dispute numbers reach new record high

The Financial Ombudsman Service received record dispute numbers in 2016–17, with the new data indicating an increase of 16 per cent in one year.

The Annual Review for the Financial Ombudsman Service (FOS) revealed that it received 39,479 disputes during the period, a 16 per cent increase on the prior year.

The increase was driven by continued growth in general insurance disputes (13,200 disputes), which accounted for 38 per cent of the overall increase.

The FOS said that the increase in general insurance disputes was due to "a continuation of industry-specific issues, including higher claim numbers, organisational changes and the impact of Cyclone Debbie, all of which may have affected insurers’ internal dispute resolution".

A third of the credit disputes related to credit cards, nearly a quarter (24 per cent) related to home loans, and a fifth were related to personal loans (19 per cent).

Of all the disputes received, the FOS accepted 22,475 in 2016–17, the vast majority of which (43 per cent) relating to credit.

Further, 10 per cent of all disputes accepted related to home loans, while 14 per cent involved credit cards and 8 per cent were for personal loans.

Some 10,464 disputes (or 41 per cent of all disputes the FOS accepted) involved banks. This was a slightly lower proportion than in 2015–16.

Of general insurance disputes, almost a third (31 per cent) involved motor vehicle – comprehensive insurance, and more than one-quarter (28 per cent) involved home building insurance. 

Of deposit-taking disputes, 63 per cent involved personal transaction accounts and the main issue was unauthorised transactions (29 per cent).

Of payment system disputes, 28 per cent involved non-cash systems and the main issue was interpretation of product terms and conditions (28 per cent).

While the FOS said that the record number of disputes "put pressure on staff workloads" and resulted in queues, it revealed that it reduced the average time taken to resolve disputes by 13 per cent in 2016–17 (and 43 per cent from the previous year).

The FOS resolved disputes in an average of 54 days in 2016–17 compared with 62 days last year.

It has since gone on to recruit additional ombudsmen and other staff to ensure that it can handle the anticipated high volume of disputes in the near future.

“This means that people can have their cases resolved more quickly and get on with the rest of their lives,” chief ombudsman Shane Tregillis said.

Looking to the future, the FOS noted the moves to create a single external dispute resolution (EDR) scheme, to be called the Australian Financial Complaints Authority.

The FOS advocated that changes to current dispute arrangements should build on "the proven features of the industry ombudsman model, and be designed to simplify, strengthen and increase access to timely, cost-effective and efficient EDR for individuals and small business[es]".


[Related: O’Dwyer parries calls for regulator scrutiny, introduces next AFCA stage]


promoted stories

Annie Kane

More from this blogger

Latest News

Recommended for You