Continuing our reporting on the issue of some consumers not receiving compensation from financial services providers (FSPs) following FOS determinations, this article provides an update on the number of unpaid FOS determinations issued under the single FOS Terms of Reference. Since 1 January 2010:
- 32 FSPs have been unwilling or unable to comply with 137 FOS determinations made in favour of approximately 194 consumers
- The value of the outstanding amounts awarded by these determinations was $12,611,859.05 plus interest as at 30 June 2016
- Inclusive of the interest awarded by the decision-maker and adjusted for inflation over time on a simplified per annum basis, the real value of this uncompensated loss is $16,629,929.56.
While the level of reported non-compliance has remained stable over the last quarter, there have been 28 complaints about non-compliance made to FOS. Pleasingly, in the majority of these, the correct outcome was achieved, albeit over a slightly extended timeframe. However, seven non-compliance issues remain outstanding. In respect of these, FOS is currently in active discussions with five FSPs that have not, to date, complied with determinations within an appropriate timeframe.
We anticipate that three of these FSPs will ultimately comply with their obligations, but that regrettably two will not be in a position to do so. The outcome of these discussions will be reflected in the update for the next quarter.
Only a very small percentage of all FOS members are involved, and these figures represent only a small proportion of all the awards we issue across all our jurisdictions in banking, insurance, life insurance and investments. Despite the small number of FSPs involved, unpaid determinations represent 22.83% of all accepted determinations issued in favour of consumers in the Investments and Advice area. More than half (56%) of the non-compliance relates to disputes in the financial planning and advisory sector.