FOS members are financial services providers who have chosen FOS as their ASIC-approved external dispute-resolution scheme. Members include banks, credit unions, building societies, general insurance companies and their agents, life insurance companies and brokers, superannuation providers, fund managers, mortgage and finance brokers, financial planners, stockbrokers, investment managers, friendly societies, time share operators, credit providers and authorised credit representatives.
At the end of the 2010 financial year there were 4755 financial service provider (FSP) members and 602 authorised credit representative (ACR) members. Under the national credit regime introduced on 1 July 2010, ACRs must be a member of an external dispute-resolution scheme such as FOS.
The dispute-resolution process
In January 2010, FOS introduced a new dispute-resolution process that applies to all disputes received after that date. The process, as shown in Figure 1, follows a number of steps from notification of the dispute through to resolution by way of a recommendation or determination. If certain legal proceedings relating to debt recovery are already in place when a dispute is lodged with FOS, the process is expedited.
[breakoutbox][breakoutbox_title]How the dispute resolution process works[/breakoutbox_title][breakoutbox_content]
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Most disputes are registered with FOS after a consumer has raised their concerns directly with their FSP but before the complaint has been addressed through the FSP’s internal dispute-resolution process.
Level of disputes
During the first six months of 2010, 8425 disputes were registered. In the same period, 2420 disputes (29 per cent) proceeded from the Registration stage to the Acceptance stage of the FOS process. Most of the remaining 6005 disputes (71 per cent) were closed during the Registration stage; a small proportion were still in Registration at 30 June 2010. A dispute is closed during Registration either because the FSP and the consumer have agreed on a resolution to the dispute or because the consumer has decided not to proceed to the next stage of the FOS process.
The fact that such a high proportion of disputes were resolved during the Registration stage shows that, in the majority of cases, the internal disputeresolution processes of FOS members are effectively resolving disputes and the FOS Registration process is working effectively. External dispute resolution – negotiation, conciliation and the other methods used by FOS – is usually not required for registered disputes.
Complaint hotspots
During 2009-2010 FOS accepted a total of 7296 disputes involving credit products. As can be seen in Table 1, the vast majority of these disputes related to consumer credit products, with the second largest category being business finance products. The financial services providers with the greatest number of credit disputes were banks (81 per cent).
The three main categories of consumer credit disputes were home loans, credit cards and personal loans. Financial difficulty was the most common cause of the complaints, but disputes also arose about the decision made by the FSP or about fees and charges.
Business finance
Disputes about business finance products related to a variety of products, including business loans, lines of credit, hire purchase agreements, leases and business credit cards.
Business finance disputes followed the same trend as consumer credit disputes, with financial difficulty being the main focus of one-quarter of these disputes. Another common issue related to decisions made by financial services providers (24 per cent) – in particular, decisions about approving finance and about the ongoing management of business facilities.
