In response to the report published today by the House of Representatives’ Economics Committee, Review of the Four Major Banks, Consumer Action Law Centre CEO Gerard Brody said:
“Dispute resolution in the finance sector should be enhanced to improve access to justice and keep financial institutions to account. A one-stop shop will reduce consumer confusion, and a new compensation scheme will mean that people won’t be left out-of-pocket with they get awards from a court or ombudsman.”
“The committee rightly recognises many of the features of the existing external dispute resolution schemes as delivering justice for consumers. These features include free access, binding and independent decision-making, balanced governance structures, industry funding and the power to resolve and provide redress in relation to systemic issues.”
“The committee defers firm recommendations about aspects of a new one-stop shop to the Ramsay Review, which is currently reviewing external dispute resolution in the finance sector. This is good, given the Ramsay Review is undertaking substantial consultation with stakeholders.”
“There are risks with replacing the current system with a statutory tribunal. While the committee recommends a tribunal, we are heartened by comments from the committee that suggest a tribunal should not operate legalistically or create barriers to access for consumers. We encourage the Government to consider the recommendations of the Ramsay Review before deciding on the form of a new one-stop shop to resolve disputes in the finance sector.”
In relation to committee recommendations on banking competition and the role of ASIC, Mr Brody said:
“It can be very difficult for consumers to switch banks due to bundled products and things like direct debits. The true cost of products can be opaque due to fancy promotions like honeymoon rates and reward schemes. Measures to give power back to consumers, including through making consumer data available to third parties and competitors, would help consumers understand the best deals in the marketplace.”
“Enhancing the ability of the Australian Securities and Investments Commission to be transparent about misconduct in the finance sector can serve to help consumers. Naming providers that breach the law will improve industry practices and help consumers”.