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Change to initial response timeframe

Currently FOS Members have 21 days to provide an initial response to disputes progressed to the Case Management stage.  Financial difficulty and legal proceedings previously issued (LPPI) disputes have an initial response timeframe of 14 days. 

Over the last 12 months Members have raised concerns about delays in receiving mail from FOS and the difficulties this creates in compiling dispute responses and material within the timeframe.  The impact has been an increase in overdue responses and FOS reminders.

As a result, we are temporarily changing the initial Member response timeframe from 21 to 28 days. This will allow an additional five working days for Members to provide their initial response and should account for any postal delays.  We aim to make this change time neutral by innovating in other administration and process aspects.

Due to the nature and urgency of financial difficulty and LPPI disputes, the initial response timeframe for these disputes remains 14 days.

This change will take effect on 1 October 2011.

We are developing capacity to accept files and documents electronically. This includes enabling Members to submit dispute responses via the FOS website secure portal.  The development work has just begun which means implementation is some time away.  However, once this capacity is in place we will revert back to the 21 day response timeframe.

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Slip Rule

Occasionally a FOS Determination or Recommendation will contain an arithmetic or clerical error which alters the meaning of the document. In those situations it is necessary to ensure the true position is conveyed to the parties to the dispute. FOS uses the “slip rule” to make the necessary corrections.

The slip rule is a recognised legal principle and has been successfully used within other jurisdictions, such as courts and tribunals, over a number of years to correct an arithmetic or clerical error in judgments or orders.

Paragraph 8.2 of FOS’s Terms of Reference provides that FOS will do what in its opinion is fair in all the circumstances, having regard to, amongst other matters, legal principles.

The slip rule is as follows: 

“FOS may correct a Determination or Recommendation if it contains –

  • a clerical mistake; or
  • an error arising from an accidental slip or omission; or
  • a material miscalculation of figures or a material mistake in the description of any person, thing or matter; or
  • a defect of form.

If a Determination or Recommendation relating to a Dispute requires a correction to address an issue listed above, a party to the Dispute may request the correction in writing. The request should explain the issue to be addressed through the correction.

An Ombudsman will decide whether FOS should make any correction. FOS may correct a Determination or Recommendation relating to a Dispute whether or not a party to the Dispute requests a correction.”

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National Credit Code Section 94

Responding to a request for postponement of enforcement action
Section 86 of the Uniform Consumer Credit Code (UCCC) provided that a debtor, mortgagor or guarantor (collectively “borrower”) may within the time specified in a notice of demand, negotiate with the credit provider a postponement of enforcement action.  This right has been replicated, and expanded upon, in section 94 of the National Credit Code (NCC).

Section 94 of the NCC provides that, after receiving a default notice, a borrower may within the 30 day default notice period request the credit provider to negotiate a postponement of enforcement proceedings. 

We remind credit providers that section 94 of the NCC expands on the requirements of section 86 of the UCCC by: 

  1. requiring the credit provider to give written notice of the outcome of the postponement application within 21 days of receiving the application
  2. requiring the credit provider to give additional information if the application is refused.  The refusal must state the reasons for the refusal to negotiate, the name of the credit provider’s external dispute resolution (EDR) scheme, and the borrower’s rights under that scheme.  

A failure to comply with section 94 of the NCC is a strict liability contravention which is compensable under section 124 of the NCC.  Therefore, we may investigate a dispute regarding a member’s failure to comply with section 94, including requesting the Applicant to provide information to show how the debt is to be repaid at the end of the specified postponement period, to ascertain if the Applicant’s proposal is realistic and if the Applicant has suffered any loss from the credit provider’s failure to consider and respond to their request.

Disputes about non-compliance with section 94 of the NCC may also be referred to FOS’s systemic issues team to ascertain whether non-compliance has a wider impact on other persons beyond the parties to the dispute.