The following consumer advocacy organisations have made a joint submission to the Ramsay EDR Review:
- Care Inc Financial Counselling Service and the Consumer Law Centre of the ACT
- Caxton Legal Centre
- Consumer Action Law Centre
- Consumer Credit Law Centre SA
- Consumer Credit Legal Service (WA) Inc
- Consumers’ Federation of Australia
- Financial Counselling Australia
- Financial Rights Legal Centre
Our organisations strongly welcome the External Dispute Resolution (EDR) Review and the broad terms of reference. We consider this review an important opportunity to ensure dispute resolution in the financial system is enhanced in the years to come by building on the largely successful operation of, in particular, the Financial Ombudsman Service.
The EDR Review is also a great opportunity to address some important shortcomings in consumer protection in financial services that have been exposed in a number of inquiries and scandals in recent years. Consumer organisations are concerned that many consumers who have legitimate grievances against financial institutions do not have convenient and effective access to justice with existing arrangements.
We are however strongly opposed to the creation of a new Banking Tribunal. We understand and share the frustrations of those who have proposed such a Tribunal but think the proposal is misconceived as it underestimates the strengths of the current EDR arrangements, the opportunities for improvement and the serious downsides of a statutory Tribunal funded from consolidated revenue. It would be far more effective to enhance and fix some of the problems and limitations of the current EDR system than to establish a new Tribunal which will undoubtedly decrease access to justice for hundreds of thousands of consumers compared to current arrangements.
The key benefits of an enhanced EDR system are:
– Greater accessibility and faster dispute resolution compared to legalistic tribunals;
– Greater flexibility in resolving disputes, including on the basis of what is fair and reasonable not just the law;
– Funding that responds to demand and does not depend on appropriation bills once this problem is no longer ‘flavour of the month’; and
– An ability to respond to systemic issues, resolve the cause of consumer problems and facilitate consumer redress.
We have identified a large number of ways in which the current system must be enhanced to address community concerns. These are set out in this submission however they can be grouped as follows:
– creating one EDR scheme that covers all financial institutions – effectively merging the Financial Ombudsman Service, the Credit & Investments Ombudsman, and the Superannuation Complaints Tribunal;
– extending the merged EDR system to cover financial services provided to small business;
– enhancing ASIC’s regulatory oversight of EDR;
– expanding the jurisdiction of the final EDR scheme, in particular raising the monetary limits for matters to be heard by the scheme, increasing the compensation it can award, and extending the scheme to include complaints about debt management firms;
– expanding the role of the EDR scheme in relation to systemic issues, including through naming financial services providers; and
– establishing a statutory scheme of last resort compensation where liable financial service providers do not or are unable to meet their obligations to consumers.edr-review-joint-consumer-submission