This article provides an update on the number of unpaid FOS determinations issued under the single FOS Terms of Reference.
Since 1 January 2010:
- 34 FSPs have been unwilling or unable to comply with 136 FOS determinations made in favour of approximately 192 consumers.
- The value of the outstanding amounts awarded by these determinations was $12,594,735.82 plus interest as at 31 December 2015.
- 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 remains at $16,622,513.74.
Unfortunately, the FSP added to the list in the last quarter has several more disputes awaiting determination. We anticipate that the FSP will also not be in a position to meet these determinations over the next quarter and so this figure will continue to rise.
In addition to the above, we continue to seek compliance from several FSPs who are currently overdue to meet awards under adverse Determinations. However, we are hopeful that further dialogue with these FSPs will result in their compliance and so we are not yet reporting issues as serious misconduct (the criteria for inclusion in this reporting).
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.
However, despite the small number of FSPs involved, unpaid determinations represent 20.48% of all accepted determinations issued in favour of consumers in the Investments and Advice (I&A) area. 56% of the non-compliance relates to disputes in the financial planning and advisory sector.
Possible actions to address uncompensated losses
We will continue to advocate for a compensation scheme of last resort through engagement with the following mechanisms:
- response to release by ASIC of report on adequacy of PII
- further discussion/consultation regarding ASIC funding mechanism for compensation scheme funding
- response to release by Senate Committee Scrutiny of Financial Advice Inquiry report and any relevant recommendations
- further discussion with ‘self-insurers’ regarding funding given need for large-scale remediation schemes
- discussions with insolvency practitioners and further analysis to obtain clearer data on amount of uncompensated loss outside of FOS process