FOS yesterday released a consultation paper that proposes to change the organisation’s terms of reference.
The proposed changes stem from the independent review of FOS’s operations and procedures earlier this year.
The independent review, conducted by CameronRalph Navigator, found FOS had only “partially met” its efficiency benchmark, with ‘timeliness’ the key sticking point.
But yesterday’s consultation paper also draws on the recommendations of the Senate Economics References Committee’s report into the performance of ASIC, which was tabled on 26 June.
The senate report recommended FOS increase its current jurisdictional limits and the caps on the maximum compensation that can be awarded, as well as indexing those amounts.
FOS’s jurisdiction is currently limited to claims in which the loss caused does not exceed $500,000.
“This is the limit currently required under ASIC Regulatory Guide 139, and is aligned to the point at which the price of a financial product will normally take it out of the “retail client” area, which is FOS’s core jurisdiction,” FOS said.
“The ‘retail client’ price has not increased since it was introduced in 2002. Any increase (including by indexation) would require ASIC approval and possibly the amendment of the regulations,” said the ombudsman.
Current terms of reference limit the amount of compensation FOS can award to $280,000 per claim, not including interest.
The FOS consultation paper invited submissions on the following questions:
- Are the current monetary limits and compensation caps adequate?
- If not, how should they be changed?
- Should the current monetary limit in paragraph 5.10) be indexed, in line with the current provision for indexing the compensation caps?
Submissions on the FOS consultation paper close on Friday 1 August 2014.
