1. FOS’s Dispute Resolution Process Jack Furphy, ERT General Manager – Early Resolutions Bae Bastian, Legal Counsel – Banking & Finance

2. Is an ASIC approved External Dispute Resolution (EDR) Scheme operating across the financial services sector. Deals with disputes from individuals and small business in relation to Banking, Credit, General Insurance, Life Insurance, Superannuation and Investments. Can consider a dispute where the amount of the claim is less than $500,000, although the most compensation we can award is $280,000. Financial Ombudsman Service (FOS)

3. Dispute Resolution Process (www.fos.org.au/elearning) Recommendation Determination RegistrationAcceptance Case Management Outcome ReviewNegotiation ConciliationInvestigation Internal Dispute Resolution

4. Registration A dispute may be lodged with FOS using our online dispute form, through the mail or, if the customer requires assistance, over the telephone. Over 60% of disputes lodged with FOS are made using the internet. A person who lodges a dispute with FOS is called an Applicant.

5. Registration When a dispute is first lodged, we need to determine: – is the dispute about a financial services provider that is a member of FOS? – has there already been an opportunity for the financial services provider to conduct its internal dispute resolution (IDR) process? If the financial services provider has already had an opportunity to complete its IDR process, the dispute will progress straight to our ‘acceptance’ stage where it will be allocated to someone for review. If the financial services provider has not had an opportunity to complete its IDR process, we will ‘register’ the dispute.

6. Registration The following information is relevant in determining whether there has already been an opportunity for the financial services provider to conduct its IDR process: – has the applicant made a complaint directly to the financial services provider? – if so, how long ago did the applicant complain? – has the applicant received an IDR response from the financial services provider? For most types of disputes, the financial services provider has up to 45 days from the receipt of a complaint to complete its IDR process. For credit-related disputes involving default notices or requests to postpone enforcement proceedings or to vary credit contracts because of financial hardship, the timeframe is 21 days.

7. The registration process is designed to put the applicant in touch with the financial services provider so that the IDR process can be completed. When we register a dispute, we send an e-mail to the financial services provider with details of the dispute, including a summary of the complaint and the applicant’s contact details. The e-mail asks the financial services provider to contact the applicant and to complete its IDR process. At the same time, we e-mail the applicant and ask them to let us know if the dispute is not resolved through IDR. Registration

8. A reminder notice is sent to the applicant 35 days later. If we do not hear from the applicant again, our file automatically closes 55 days after it was created. If the applicant contacts us to say that the dispute did not resolve through IDR, the dispute will progress to our “acceptance” stage. If a dispute is urgent, it will skip the registration process as if there has already been an opportunity for IDR. This applied in exceptional circumstances only. An example is where legal proceedings have been commenced. In this situation, an expedited dispute resolution process is used. Registration

9. Around 70% of disputes that are registered resolve at this stage. The only assessment of jurisdiction which occurs at the registration stage is whether a dispute relates to current FOS member. All other jurisdictional assessments are made at the next stage – “acceptance”. Registration

10. Acceptance At the acceptance stage, an unresolved dispute is allocated to a case worker for review of whether the dispute is within our Terms of Reference When a dispute enters the acceptance stage, we send the financial services provider an e-mail providing details of the dispute and explaining the process. No action is required by the financial services provider at this stage. Any required information or documentation is requested from the applicant. If a dispute is assessed as being within Term of Reference, it then progresses to the Case Management stage.

11. Case Management At this stage, the disputes are reviewed and considered and further information may be obtained from the parties and exchanged. Dispute resolution methods such as negotiation, conciliation and merits assessment may be used to resolve disputes where appropriate. Where a dispute remains unresolved, a detailed investigation will take place in preparation for a written decision (referred to as a Recommendation or Determination) to be made. However, negotiation and conciliation may still be used at this stage to achieve a resolution. Case Management

12. If dispute is not resolved through negotiation, conciliation or initial merits assessment, next step is for detailed investigation to commence, resulting in a Recommendation or Determination Most unresolved FOS disputes will proceed to a Recommendation first, unless criteria to expedite a Dispute direct to Determination is met: Urgent disputes Disputes unlikely to resolve through Recommendation No response received from FSP ae Management

13. Outcome Outcome is the final dispute resolution stage where: – disputes resolved by agreement are closed; – disputes outside our jurisdiction are closed; or – unresolved disputes are finalised by Recommendation or Determination.

14. Outcome - Recommendation A Recommendation is a decision made by a Case Manager. When a Recommendation is made by FOS, it will: – be in writing; – set out a summary of the Applicant’s claim and the issues in dispute; – set out the FSP’s response to the claim and the issues; – outline the information and documentation relied upon to reach a view on the merits; and – outline the case manager’s view on the merits and reasons.

15. Outcome - Recommendation Both parties have 30 days to accept or reject the Recommendation. If the Recommendation is accepted by both parties then we close our file If the Recommendation is rejected by the FSP or the Applicant, the dispute will proceed to Determination. If the FSP accepts the Recommendation, but the Applicant neither accepts nor rejects the Recommendation, we close our file and the FSP is not bound by the Recommendation

16. Outcome - Determination When a Determination is made by FOS, it will: – be in writing; – provide a summary of the dispute; – outline the issues in dispute; and – set out the decision made by the Ombudsman/Panel and the reasons for the decision. The Applicant has 30 days to accept the Determination. If it is not accepted by the Applicant within 30 days, the FSP is not bound by the Determination.