In its latest circular, FOS welcomed the Financial System Inquiry interim report’s focus on “consumer trust and confidence in the financial system”.
“This reflects the key theme of the FOS submission to the inquiry, in which we recommended placing sustainable consumer trust in financial services at the heart of the inquiry’s considerations,” said the ombudsman.
FOS also welcomed the five consumer outcomes listed in the interim report, highlighting the FSI’s opinion that consumers should “have access to timely, low-cost and efficient dispute resolution and remedies when problems arise”.
“The inquiry’s interim report canvasses the concerns expressed by FOS and others that current compensation arrangements are not adequate to provide redress to consumers who have suffered financial loss,” said FOS.
“It also canvasses some of the issues about the sufficiency of relying on professional indemnity insurance as a compensation mechanism. The interim report noted that submissions were mixed on the need for a statutory compensation scheme,” the ombudsman said.
The inquiry is currently seeking further information on the question: ‘Given the limitations of professional indemnity insurance, what options, if any, exist for addressing the issue of consumer loss?’
“FOS remains an advocate of some form of limited compensation scheme of last resort as the most effective way to deal with the issue of consumer losses,” said the ombudsman.
“We remain willing to work with all stakeholders on how such a scheme can be designed and funded in a way that addresses stakeholder concerns while also addressing consumer needs,” said FOS.
“We will provide a further submission to the inquiry in response to their request for more information on this issue,” said the ombudsman.
