Working with our process

45 days for IDR

How the time period of 45 days for Internal Dispute Resolution (IDR) operates in practice

Which disputes does the 45 day period for IDR apply to?
When is a dispute “lodged” with FOS?
When does FOS refer a dispute to IDR?
ASIC’s Regulatory Guide 165 (RG 165) reflects 45 day time limit for IDR
What is a complaint?
When is a complaint made to an FSP for the purpose of calculating the 45 days for IDR?
When will FOS get involved?
What is an IDR response?
Will a new issue raised after lodging a dispute with FOS mean the complaint returns to IDR?
Can FOS extend the 45 day period for IDR?
When might FOS reduce the 45 day period for IDR?
Conclusion

Some illustrations of the application of the 45 day period

 

The time period of 45 days for a financial services provider (FSP) to respond to a complaint through its internal dispute resolution (IDR) process is an integral part of the new process under the new FOS Terms of Reference (TOR). We have published operational guidelines (OGs) about how the relevant provisions of the TOR operate.


Set out below is a full discussion of how the 45 day period for IDR operates including some of the applicable TOR and OGs. Where we are reproducing parts of the OGs, the text is colour coded.


Which disputes does the 45 day period for IDR apply to?

Any dispute lodged by an applicant with FOS after 1 January 2010 is governed by the current TOR irrespective of when the original complaint was made. Therefore, the 45 day time frame for IDR applies to all of the disputes lodged with us since 1 January 2010.


Date dispute lodged Applicable TOR
Before 1/1/2010 Old TOR continue to apply
Between 1/1/2010 and 31/12/2011
Schedule 1 states remedy cap
New TOR apply
On or after 1/1/2012 New TOR apply
Schedule 2 states remedy cap

When is a dispute "lodged" with FOS?

As detailed in the OGs to paragraph 6.1 of the TOR, a dispute is treated as being "lodged" with FOS when it is first referred to FOS for resolution.


A dispute may be referred to FOS:
  • By submitting an Online Dispute Form, available on the FOS website www.fos.org.au
  • In writing, using the Dispute Form that an Applicant can download from the FOS website, or by email, fax or letter; or
  • In a case where assistance from FOS is needed, by telephone.

When does FOS refer a dispute to IDR?

The first stage of the FOS dispute resolution process focuses on providing the FSP with an opportunity to resolve the dispute. We offer this opportunity in most cases when an applicant lodges a dispute with us and the applicant:

  • has not raised it with the FSP, or
  • has raised it with the FSP and less than 45 days have passed and the applicant has not received an IDR response.

In these two scenarios, we register the dispute and refer the dispute to the FSP for review and resolution if possible. If:

  • 45 days have passed since the applicant first contacted the FSP or
  • the applicant receives an IDR response that does not resolve the dispute,

the dispute goes straight to stage 2 of our dispute resolution process – Acceptance.


This means that in most circumstances:

  • the FSP has up to 45 days to attempt to resolve the dispute, and
  • the 45 day period starts from the date that the FSP is first advised of the dispute (in person, by telephone or in writing).

Specific categories of disputes have a reduced timeframe.


Where legal proceedings relating to debt recovery are on foot at the time the dispute is lodged an expedited dispute resolution process applies and the dispute progresses directly to Acceptance. This means the FSP is not provided with an initial opportunity to resolve the dispute.


Where the dispute involves:

  • hardship applications,
  • default notices, and/or
  • enforcement proceedings (other than legal proceedings relating to debt recovery),

the FSP has up to 21 days to attempt to resolve the dispute. The 21 day period starts from the date that the FSP is first advised of the dispute (in person, by telephone or in writing).


In certain circumstances, we may consider extending or reducing this time frame.


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ASIC's Regulatory Guide 165 (RG 165) reflects 45 day time limit for IDR

FOS's TOR reflect the requirements of RG 139 and 165. FSPs that hold AFSL licences and credit licences must have an IDR process that complies with RG 165.


RG 165 provides that:

  • an FSP must provide a final response to a complainant within a maximum of 45 days (RG 165.80(b))
  • the 45-day time frame to provide a final response to the complaint:
    • does not re-commence when new information is provided (RG 165.85(a))
    • is applicable to FSPs who operate multi-tiered IDR procedures (RG 165.104).

These provisions make it clear the FSP's IDR structure is irrelevant to the calculation of the 45 days by which a final response must be given to the customer.


While RG 165 refers to the National Credit Code, a "credit contract" under the FOS TOR means a contract regulated by the Uniform Consumer Credit Code or such other federal credit legislation as may replace it. Therefore the abridged timeframes will also apply to disputes involving credit facilities regulated by the Uniform Consumer Credit Code.


What is a complaint?

As the 45 day period for IDR starts running when a complaint is first made, it is therefore necessary to be clear about what amounts to a complaint.


The complaints that FOS will consider are complaints that are unresolved. In the TOR, the term "dispute" is used to describe unresolved complaints.


A "complaint", is defined in AS ISO 10002-2006 as:

"An expression of dissatisfaction made to an organisation, related to its products or services, or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected"


For general insurers, the General Insurance Code of Practice mirrors this definition:

"An expression of dissatisfaction made to us related to our products or services or to our complaints handling process where a response or resolution is explicitly or implicitly expected."


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When is a complaint made to an FSP for the purpose of calculating the 45 days for IDR?

As detailed in the OGs to paragraph 6.3 of the TOR, where the applicant requested the FSP to remedy the issues in dispute before lodging a dispute with FOS, the IDR period commences on the date of the expression of dissatisfaction to the FSP, whether in writing or by any other means.


FOS recognises that an applicant can complain to the FSP by letter, fax, telephone, in person or by email.


An FSP is defined in paragraph 14.1of the TOR to include:

employee, agent or contractor of the Financial Services Provider including any person who has actual, ostensible, apparent or usual authority to act on behalf of the Financial Services Provider or authority to act by necessity in relation to a financial service


This means that if an applicant complains to any employee, agent or contractor (such as an insurance assessor or collections agent) of the FSP, then that is a complaint made to the FSP.

When will FOS get involved?

If:

  • 45 days have passed since the applicant first contacted the FSP or
  • the applicant receives an IDR response that does not resolve the dispute,

the dispute goes straight to stage 2 of our dispute resolution process – Acceptance.

What is an IDR response?

There are requirements set out in industry codes and in RG 165 around the need for an FSP to provide a final response to a complaint. RG 165.82 provides that a final response means the FSP must write to the complainant informing them of:

  • the outcome of their complaint
  • their right to take their complaint to EDR, and
  • the name and contact details of the relevant EDR scheme to which they can take their complaint.

Paragraph 14.1 of the TOR defines an "IDR Response" as:

… a communication in writing from the Financial Services Provider to an Applicant advising:

  1. the Financial Services Provider's final position in relation to the Applicant's complaint after the conclusion of the Financial Services Provider's internal dispute resolution process; and
  2. the Applicant's right to take the complaint to FOS and the timeframe for doing so and FOS's contact details."

Therefore, if:

  • 45 days have not passed and
  • the response provided by the FSP does not comply with this definition of an IDR response,

FOS will refer the dispute to the FSP for the balance of the 45 day IDR period.


However, an FSP should beware of the situation when its first-tier response does not clearly inform the applicant:

  • it is a final decision, and
  • what the dispute resolution process is following this initial response, including further IDR steps and/or EDR.

In these situations, it is possible FOS will accept this response as being the "IDR Response" and proceed with reviewing the dispute, even if the 45 day period has not lapsed to ensure an efficient and timely handling of the dispute.


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Will a new issue raised after lodging a dispute with FOS mean the complaint returns to IDR?

The OGs also detail that if an applicant who lodges a dispute with FOS has previously been through IDR with the FSP, but later raises new issues in the dispute, FOS will normally refer these new issues back to the FSP to go through IDR before FOS considers the dispute.

In some circumstances, however, FOS may start to consider a dispute when new issues raised by the applicant have not been through IDR. This may happen when the new issues are:

  • Closely related to issues that have been through IDR, or
  • So minor that FOS considers they would be unlikely to impact on an IDR response provided by the FSP.

An example of a closely related new issue might be a dispute about the quantum of a claim which had been denied but was then accepted as part of the IDR review by the insurer.


An example of a minor issue that can arise which would be unlikely to impact on the FSP's IDR response might be where the applicant seeks to introduce material which is substantially the same as information already provided to support a matter already raised and responded to.

Can FOS extend the 45 day period for IDR?

Paragraph 6.4 provides FOS with the discretion to extend the 45 day period for IDR "if FOS considers special circumstances exist". The OG provides details as to how and when FOS may exercise this discretion.


The OGs provide the following examples of special circumstances:

  • Where settlement negotiations are progressing, but taking longer than 45 days, and both parties agree to continue negotiations without FOS's involvement;
  • Where an FSP is waiting for a report by an expert or external consultant before providing an IDR Response and FOS considers the resulting delay reasonable; or
  • Where records an FSP needs to respond to a complaint are old and difficult to retrieve.

When deciding whether there are special circumstances, as well as considering the circumstances of the relevant dispute and general principles of fairness, FOS will consider:

  • Whether the parties to the dispute agree to the extension of the IDR period;
  • Whether the applicant had previously contacted the FSP about the dispute;
  • Whether any settlement negotiations are progressing and, if so, how long they are taking;
  • Whether the FSP is waiting for information to help it to provide an IDR response; and
  • Whether the length of the extension requested is reasonable.

If FOS decides to extend the IDR period for a Dispute, it will advise both parties of the decision and the reasons for it and confirm the new IDR timeframe.


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Can an FSP or applicant ask for an extension of the 45 day period for IDR?

Any party may ask for an extension to the IDR period.


If an FSP needs more time to provide an IDR response, the FSP can contact the applicant and seek the applicant's consent to an extension. This needs to be done as soon as the need is identified. If the applicant does not consent, the FSP can request FOS to extend the IDR period before the IDR period elapses.


The OGs set out that the request must:

  • Be in writing;
  • Be made as early as possible and before the 45 day IDR period expires;
  • State the period of the extension sought;
  • Explain the special circumstances considered to warrant the extension; and
  • Provide copies of supporting documents.

FOS recommends that any FSP seeking an extension contact us by email, fax, letter or phone as soon as possible to let us know that an extension is being sought.

When might FOS reduce the 45 day period for IDR?

Under paragraph 6.4 of the TOR, FOS may start to deal with a dispute before the IDR period ends if FOS considers the matter urgent. This means FOS may commence investigating or otherwise considering the dispute. In these cases, the FSP would not be given 45 days or the balance of 45 days to provide an IDR response. The OGs provide details as to how and when FOS will exercise this discretion.

Examples of urgent situations include:

  • Where the applicant is in ill health;
  • Where an FSP is in administration, liquidation or has otherwise ceased trading;
  • Where delaying investigation would significantly disadvantage a party; and
  • Where any delay may cause or exacerbate financial hardship for the applicant.

In urgent situations, it is sometimes necessary to reduce the IDR period without first contacting the FSP. We will notify the FSP as soon as possible after the dispute has been moved into investigation.


If FOS decides to start dealing with a Dispute before the IDR period ends, it will advise both parties of the decision.

Conclusion

From a practical point of view, the things to note about the 45 day IDR period are that it:

  • starts from the date a complaint is communicated to the FSP (noting this includes an FSP's agent, employee and/or contractor)
  • applies regardless of whether an FSP operates a simple or multi-tier IDR process
  • does not stop running if an applicant has failed to respond to a review or failed to initiate a further review in accordance with the FSP's IDR process
  • may be extended in special circumstances, and
  • may be reduced if FOS considers the matter urgent.

 

Read some illustrations of the application of the 45 day period...