Under its terms of reference, FOS is obliged to identify, resolve and report issues that “will have an effect on people beyond the parties to a dispute”.
Three of the systemic issues related to dealing with customers in financial difficulty.
In the first case, the financial services provider (FSP) was making it difficult for a client to request hardship assistance; in the second, the FSP made direct debits from a client’s account despite being informed they were in financial difficulty; and in the third, the FSP had a policy of denying hardship existence to one party in a joint debt if they were estranged from the other party.
FOS also found that errors in the processing of a client’s salary continuance policy represented a systemic issue. In this case the FSP made CPI calculation errors prior to the introduction of an automated process; the FSP also failed to both follow its unpresented cheques policy and to reissue the cheques.
Finally, the ombudsman found that an FSP had commenced legal proceedings in New South Wales against clients who resided in other states, which is in breach of the National Consumer Credit Protection Regulations 2010. Because the incorrectly lodged judgements had been occurring since 1 July 2010, FOS considered the breach to be a systemic issue.
Possible systemic issues identified by FOS in the October to December 2012 quarter included the conduct of employees or authorised representatives; inappropriate complaints handling procedures; compliance with ‘Know Your Client’ obligations; failure to advise about FOS; and delays in the availability of assets causing loss.
On the positive side, FOS noted that in the December 2012 quarter a number of FSPs had amended their policies relating to the authenticity of a client’s signature; an FSP changed its processes to ensure that collection activity ceases during FOS disputes; and FOS were satisfied that the relevant terms of an ASIC enforceable undertaking had been amended, with ASIC’s approval.
