Skip to content
Circular Home
Issue 27 - October 2016

Unpaid determinations update


Unpaid Determinations
Non-compliance with FOS determinations due to the lack of financial resources of the relevant member firms continues to increase, with more than $13 million not returned to affected consumers in the past six years.

It is important to note that this is not an issue about FOS’s powers, capacity or willingness to enforce our determinations. Rather, the problem arises because the lack of financial resources of the firm means there is no effective respondent to legal proceedings by FOS or any other enforcement action. See below for more information.

The table below sets out the relevant figures between 1 January 2010 and 30 September 2016:



Investments & Advice Only

Whole of FOS (Determinations)

No. of Accepted Determinations




Value of Awards




The 143 determinations which have not been complied with impact 203 people who are still awaiting compensation for wrongdoing by their financial services providers (FSPs).

Unpaid determinations represent more than 18% of all accepted determinations issued in favour of consumers by the Investments and Advice (I&A) team. The value of unpaid determinations is almost one-quarter (23%) of the compensation awarded by I&A.

Despite the high proportions of non-compliance for this particular sector of the industry, overall compliance with FOS Determinations remains high at a percentage of 99.974%. [1]



Percentage of FOS total

No. of FSPs



No. of unpaid Determinations



Value of Unpaid Awards




It is important to note this is not an issue about FOS powers, capacity or willingness to enforce our determinations
Out of the 13,576 FOS members, only 35 financial services providers (FSPs) have not complied with their obligations over the last six years. Of these, 19 have experienced an insolvency event and 27 have had the relevant financial services licence revoked, or otherwise ceased.

Where a financial services provider is solvent and there is a good likelihood of recovery, FOS has relevant powers to ensure, and has ensured, compliance through litigation. This has occurred on four occasions over the past six years. FOS was successful in all matters, but this process takes time.

Accordingly, the issue of unpaid determinations arises where due to lack of financial resources there is no suitable or effective respondent to any action by FOS. Similar limitations would apply to a court or a tribunal.

Uneven spread of non-compliant FSPs
The issue of non-compliance with FOS determinations is spread unevenly throughout the financial services sector. The top categories of non-compliant FSPs are:

  1. Financial planners and advisors: 57%
  2. Operators of Managed Investment Schemes: 11%
  3. Credit providers: 9%

Addressing uncompensated losses
FOS has made several submissions in recent years calling for a compensation scheme of last resort for consumers. We see it is a key initiative to build trust and confidence in financial services.

Now we have made a further submission to the independent expert panel reviewing external dispute resolution and the complaint framework for the financial system.

In our submission, we again urged the panel to support the establishment of a compensation scheme for consumers of financial services.

While the panel will not be able to make recommendations on a compensation scheme of last resort, it will be able to make observations on this important gap in the regulatory framework. 

FOS believes that it is essential for the effective operation of external dispute resolution that consumers awarded compensation by FOS can be confident that this compensation will be paid.

To help achieve broad consensus about the structure and operation of a compensation scheme of last resort, FOS is working with key stakeholders over the next two months to identify any issues that would impede implementation of such a scheme.

[1] Based on the most recently available figures contained in the 2014-2015 Credit and Investments Ombudsman (CIO) Annual Report and its submissions to the Ramsay Review Panel, CIO has made 18 determinations and 5 of these have not been complied with. This is a percentage compliance rate of only 72.222%