| Our Financial Difficulties Team includes: Joanna Harris Georgina Frost Anna Mandoki Tim Goss Sally Thompson | A key element of our Banking & Finance group’s new approach to financial difficulty disputes involves more extensive use of telephone conciliation conferences. Conciliation can be a much faster and more effective way of resolving disputes than our standard investigation process. Our conciliators encourage an open and informal discussion between the parties, during which both parties are able to put forward their points of view and gain a better understanding of the issues. The use of conciliation conferences for financial difficulty disputes is now well under way. As we had hoped, the process is proving to be a very successful method for resolving disputes. In the period April to November 2009, 43 telephone conciliation conferences were held. Of these, 39 (or 91%) were either resolved through the conciliation process or have post-conciliation negotiations still underway. The large range of options that can be generated during a conciliation conference allows for more flexibility of outcomes. The types of agreements reached through conciliation include repayment arrangements that are affordable for the debtor, sometimes involving partial waivers of debt. In some cases, the only option might be the sale of a property. In these cases, the outcome of conciliation could include an agreed timeframe for the sale of the property by the debtor, which takes into account the needs of both parties. As the case studies on this page show, we are finding that conciliation conferences help the parties to turn their focus towards the future, rather than concentrating only on the history of a dispute. This is proving to be one of the key benefits of the new process – both parties are encouraged to look at the ‘bigger picture’, and agree on a way to move forwards. Click here to view/download a guide to our conciliation conferences [PDF]. Financial difficulty roadshows The Financial Ombudsman Service has recently developed dedicated information sessions for legal advisory, financial counsellor groups and financial services providers around Australia on its process for handling financial difficulty disputes.
Presented by our Financial Difficulties Team, these practically based sessions have been provided in response to the expected changes resulting from the proposed new National Consumer Credit Protection legislation and our new Terms of Reference. In particular the focus is on how the changes impact financial difficulty dispute procedures. Areas covered include: • variations to consumer credit contracts
• timing of disputes and use of internal
dispute resolution processes
• resolution handling options
• telephone conciliation conferences. | CASE STUDY
Owning the decision to sell Mr and Mrs F were both still working but close to retirement. Mrs F fell ill and was unable to work. The couple could no longer afford to keep up their home loan repayments, but they didn’t want to sell their home. They had made no repayments for over a year and the equity in the property was steadily decreasing. The Financial Ombudsman Service arranged a conciliation conference between Mr and Mrs F and their financial services provider. During the conference the couple realised that their best option was to sell their home themselves, rather than wait for it to be repossessed. The financial services provider agreed to allow them six months to do this, which took into account the prime selling season for their beachside property. The financial services provider also offered a small ex-gratia payment on the settlement of the property to encourage a faster sale. | | CASE STUDY
When the financed vehicle creates greater capacity to earn Mr G possessed a vehicle financed by a loan from the financial services provider and which secured the loan. Mr G used the vehicle to visit customers. Irregular repayments had been made to the loan. After failed attempts to negotiate a repayment arrangement with Mr G, the financial services provider wished to enforce its security as the loan was significantly in arrears. Mr G did not want to lose the vehicle as he would lose his earning capacity and would not be able to visit his customers. Mr G’s statement of financial position did not show a surplus that would allow him to meet the repayments.
The Financial Ombudsman Service arranged a conciliation conference between Mr G and his financial services provider. During the conciliation conference Mr G said that he had a new employment contract due to start in a few months time that would allow him to meet the full repayments and repay the arrears. A repayment arrangement was agreed which would allow reduced repayments until the new contract started. Voluntary surrender of the vehicle would be given if there was default. The resolution would allow Mr G to keep his vehicle and retain his earning capacity while giving the financial services provider an immediate right to the vehicle if there was a further default. | | The sessions were very well received with high numbers of participants. For those who were unable to attend the sessions, there is a dedicated set of resources here on our website including: • a fact sheet for consumers
• a fact sheet for consumer advocates and
participating financial services providers
• a guide to how conciliation conferences work
• slides from the recent financial difficulty
workshops for consumer advocates, and
• a downloadable Statement of Financial Position
form. For more information on this or other community programs, please contact Robyn McCutchan, Community Program Manager, at rmccutchan@fos.org.au. | |
