In a consultation paper, ASIC has proposed a new external dispute resolution (EDR) claim limit of $280,000, to improve dispute resolution systems between the financial services industry and consumers.
The paper suggests EDR schemes should operate on a compensation cap, so the vast majority of consumer transactions in the industry are covered, according to ASIC deputy chairman Jeremy Cooper.
“To ensure that the majority of consumer complaints can be heard through an EDR scheme, as an alternative to the court process, we propose to increase the cap on EDR scheme compensation to $280,000, to reflect the significant increases in the value of consumers’ investments in recent years,” he said.
“This would mean that some schemes would need to lift their current limits within an appropriate transitional period.”
ASIC’s consultation follows the creation of the new Financial Ombudsman Scheme earlier this year, which combined three dispute resolution bodies, making it easier for consumers to know where to go, should they have a dispute.
“It is timely that we review our guidance so the new Financial Ombudsman Service has the best possible framework in which to develop its terms of reference over the next 18 months, and set the standard for EDR,” Cooper said.
“We encourage all ASIC-approved EDR schemes, licensees, consumers and investors to comment on the issues and proposals we have identified.”
The closing date for submissions is November 7, 2008.
