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Systemic Issues



This article summarises systemic issues that FOS identified during the June quarter of 2011 and reported to ASIC.  The FOS systemic issues process is outlined in the December 2010 circular (

To learn more about the FOS approach to Systemic Issues Management, access online training by clicking the following link: The Systemic Issues Management Process is used by FOS for handling the identification and resolution of Systemic Issues as required by its obligations to the Australian Securities and Investments Commission.

By completing this online training, participants should be able to:

  • provide an overview of Systemic Issues and their impacts
  • explain the purpose of the Systemic Issues Management process
  • understand how the FOS Systemic Issues Management process can help businesses with their risk management framework

CPD points are available upon completion.

Incorrect Claim Denial

Following review of a complaint made to FOS, an FSP acknowledged that, in terminating an applicant’s income protection benefit and policy, it had incorrectly referred to revised policy wording.  It was determined by FOS that the applicant’s benefit should not have ceased and the FSP therefore recommenced payment of benefits to the applicant.

The issue reviewed as potentially systemic was whether the FSP had referred to incorrect policy wording when assessing customers’ claims for disability benefit thereby incorrectly ceasing payments to other similarly affected customers. The FSP conducted a review of its data relating to disability claims and identified that it had incorrectly terminated disability benefits for three other eligible policy holders.

Error in Credit Listings

In each of a number of disputes relating to credit card debts received by FOS, judgement had been obtained in relation to the debts and the debts had been assigned some years later to a particular FSP. 

The FSP that purchased the debt then proceeded to list payment defaults on each of the relevant customers’ credit files.  In FOS’s view, the listings were not made properly.  The defaults were not, as required, pursuant to the credit agreements.The underlying basis of the debts (the credit contracts) had merged in the judgements.  In addition, if the identical debt had been listed by the original credit provider and then relisted by the FSP, such re-listings ought not to occur both as a matter of policy and interpretation.  FOS therefore raised this matter as potentially systemic to determine whether other customers of the FSP may have been similarly affected.

Based on information provided, in particular that the FSP had made a large number of listings relating to instances where judgement was obtained prior to the placement of a default listing on an individual’s personal credit file, FOS considered that the matter represented a definite systemic issue.