THE Financial Ombudsman Service (FOS) Australia received record dispute numbers in 2016-17, according to new data published today.

The Annual Review shows that FOS received 39,479 disputes, a 16 percent increase from last year, after a 7 percent increase the previous year.
 
The increase was driven by continued growth in general insurance disputes. The number of general insurance disputes received (13,200) increased by 2,612, accounting for about 38 percent of the overall increase.
 
FOS said the increase in general insurance disputes was due to a continuation of industry-specific issues including higher claim numbers, organisational changes and the impact of Cyclone Debbie, all of which may have affected insurers’ internal dispute resolution.
 
Resolving disputes more quickly and efficiently
 
Overall, FOS reduced the average time taken to resolve disputes by 13 percent in 2016-17 and 43 percent from the previous year without compromising the quality of outcomes. A major challenge this year has been the increase in disputes received (from 34,095 to 39,479).
 
“This means that people can have their cases resolved more quickly and get on with the rest of their lives,” Chief Ombudsman Shane Tregillis said.
 
FOS resolved disputes in an average of 54 days in 2016-17 compared with 62 days last year and 95 days in 2014-15. It also closed 44% percent of disputes within 30 days (up one percentage point from last year and double the previous year’s 22%).

The record number of disputes have put pressure on staff workloads and we saw some queues re-emerge in the second half of the year. In response to this, we have recently recruited additional ombudsmen and other staff to ensure we can handle the anticipated high volume of disputes we continue to receive.
 
Financial difficulty disputes continue to decline
 
Financial difficulty disputes, which occur when a consumer is unexpectedly unable to meet their payment obligations, fell again in 2016-17.
 
Chief Ombudsman Shane Tregillis said this was due to improvements that FSPs were continuing to make in managing hardship requests and complaints from customers in financial difficulty, consistently low interest rates (which had reduced repayment pressures for many borrowers), and improvements to the FOS process.
 
Systemic issues a key priority
 
A key focus again was on systemic issues. FOS identified and referred 192 possible systemic issues to FSPs for response and resolved 66 definite systemic issues. FSPs said more than 940,000 customers were affected by these systemic issues, leading to significant refunds and other remedies such as amendments to, or removal of, credit listings. 
 
Improving accessibility
 
In 2016-17, FOS continued working to make its service as open and accessible as possible. “Every person who comes to us has specific circumstances that we need to take into account,” Mr Tregillis said.
 
As part of its work in response to the Victorian Royal Commission, FOS encouraged applicants to identify if family violence was a factor in their dispute. We also developed partnerships with expert services to help staff understand and help people affected by family violence and financial elder abuse.
 
A key achievement was completing the FOS Reconciliation Action Plan and having it endorsed by Reconciliation Australia. The plan outlines 16 key initiatives to help make FOS more accessible to Aboriginal and Torres Strait Islander peoples.
 
What the disputes were about
 
FOS accepted 22,475 disputes in 2016-17. Of these, there were:
 

• 10,973 credit disputes (43%)
• 8,756 general insurance disputes (35%)
• 1,861 deposit-taking disputes (7%)
• 1,331 payment system disputes (5%)
• 1,292 investments and advice disputes (5%)
• 1,018 life insurance disputes (4%)

Total disputes accepted (22,475) are based on counting disputes that may involve multiple products or issues as single cases.
 
Of credit disputes, one-third (33%) involved credit cards, one-quarter (24%) involved home loans and one-fifth (19%) were about personal loans. Of all disputes accepted by FOS, credit cards were involved in 14 percent, home loans 10 percent and personal loans 8 percent.

Some 10,464 disputes (or 41% of all disputes FOS accepted) involved banks. This was a slightly lower proportion than in 2015-16. Disputes involving banks were mainly about FSP decisions (23%) and financial difficulty (20%).
 
Of general insurance disputes, almost one-third (31%) involved motor vehicle – comprehensive insurance and more than one-quarter (28%) involved home building insurance. The main issues were claim amount (20%), denial of claim (18%) and denial of claim – exclusion/condition (16%).
 
Of deposit-taking disputes, 63 percent involved personal transaction accounts and the main issue was unauthorised transactions (29%). Of payment system disputes, 28% involved non-cash systems and the main issue was interpretation of product terms and conditions (28%).
 
Of investments and advice disputes, 25 percent involved mixed asset funds (investing in multiple asset classes such as cash, bonds, shares and property), and the main issue was inappropriate advice (24%). In life insurance, almost half (48%) the disputes involved income protection insurance, and the main issue was denial of claim (26%).
 
External dispute resolution review
 
FOS contributed throughout the year by making submissions to the Federal Government’s review of the financial system’s external dispute resolution (EDR) and complaints framework.
 
FOS advocated that changes to current dispute arrangements should build on the proven features of the industry ombudsman model, and be designed to simplify, strengthen and increase access to timely, cost-effective and efficient EDR for individuals and small business.
 
The key elements of the industry ombudsman model remain at the heart of the Government’s plans for a single EDR scheme, which is to be called the Australian Financial Complaints Authority.
 
 
Links: FOS Annual Review

ends

THE Australian Small Business and Family Enterprise Ombudsman has welcomed the introduction of shorter, plain English loan contracts by National Australia Bank for small business borrowers.

The bank announced yesterday that more than 130,000 Australian business owners would benefit from a complete overhaul of its existing business standard loan form contract.

Ombudsman Kate Carnell said this was a positive step.

“My small business loans inquiry recommended this in December last year and called for implementation by July 2017,” Ms Carnell said.

“It followed unfair contract terms legislation coming into force last November.

“The inquiry report recommended that where a small business had met loan payments and acted lawfully, the bank must not default a loan for any reason.

“The report also said conditions must be removed where banks could unilaterally value existing security assets during the life of a loan; and not invoke financial covenants or catch-all ‘material adverse change’ clauses.

“I applaud NAB for being first off the mark and urge other banks to follow.

“It shouldn’t have taken so long, but we finally have a situation where banks will be treating small business clients as partners and share some of the risk. Currently the contractual relationship is one-sided and unfair.”

The NAB statement says: “The changes come after NAB announced financial indicator covenants will no longer be used in most loan contracts for new and existing small business customers with total business lending of less than $3 million in April 2017.”

However, Ms Carnell said it would be disappointing if changes such as these were not applied by all lenders to loans above $3 million.

“The banks’ own independent expert adviser on the ABA Code of Banking Practice review, the Financial Ombudsman Service and the Government’s response to the Ramsay review on external dispute resolution have all identified a credit facility of at least $5 million is an appropriate threshold,” she said.

“I’ll continue talking to the government, opposition, crossbench MPs and the banks about raising the threshold to $5 million.”

www.asbfeo.gov.au

Ends

LOGILITY Inc., a provider of collaborative supply chain optimization and advanced retail planning solutions, today announced the company became a corporate sponsor of the Australasian Supply Chain Institute (ASCI).

As a corporate sponsor, Logility is better positioned to provide the vibrant Australasian supply chain community with new opportunities to enrich their supply chain knowledge and learn from the best practices of Logility’s more than 40 years helping to optimize some of the world’s leading supply chains. 

The Australasian region has experienced significant growth that has led to increasingly more complex supply chains. Visibility, efficiency and integrated planning have become crucial for companies to stay ahead of this changing market. Companies across the region have turned to Logility Voyager Solutions to transform these challenges into opportunities for profitable growth. Today’s announcement further strengthens Logility’s commitment to and helping to shape the region’s supply chain of the future.

“Logility will add value to ASCI members with their 40 years’ worth of knowledge on supply chain optimization,” said Dr. Pieter Nagel, CEO, ASCI. “We welcome Logility into our community and look forward to the solutions and programs that can help our members in a time when optimization is key to moving forward.”

“Optimizing supply chain performance is an increasingly vital component of a company’s success in today’s rapidly evolving global market,” said Allan Dow, president, Logility. “Fierce competition, rising customer expectations and volatility in both supply and demand are driving the need for supply chain professionals to employ resilient business processes and advanced planning solutions such as Logility Voyager Solutions to drive more profitable growth and boost efficiencies. Logility is excited to partner with ASCI to help elevate the role of supply chain in the region.”

Under the sponsorship, Logility will provide opportunities for members to explore new educational resources including white papers, eBooks, webinars, and more.

About ASCI

Established in Australia in 1963 as a not for profit organisation, apicsAU, now trading as Australasian Supply Chain Institute (ASCI), facilitates and enables the development and professionalisation of the Australasian Professional Supply Chain Community. ASCI provides formal education programs, site visits, research, industry presentations and peer learning to its members with a range of opportunities to enrich and grow professional supply chain performance and competence. ASCI is a Premier Channel Partner of APICS and offers APICS certification programs in Australia, as well as other international supply chain management certifications. ASCI membership is available to individuals and provides access to educational programs, a network of industry professionals, real-world learning opportunities, resources and social media networks.

About Logility

With more than 1,250 customers worldwide, Logility is a leading provider of collaborative supply chain optimization and advanced retail planning solutions that help small, medium, large, and Fortune 500 companies realize substantial bottom-line results in record time. Logility Voyager Solutions is a complete supply chain management and retail optimization solution that features a performance monitoring architecture and provides supply chain visibility; demand, inventory and replenishment planning; Sales and Operations Planning (S&OP); Integrated Business Planning (IBP); supply and inventory optimization; manufacturing planning and scheduling; retail merchandise planning and allocation; and transportation planning and management. Logility customers include Abercrombie & Fitch, Big Lots, Fender Musical Instruments, Parker Hannifin, Verizon Wireless, and VF Corporation. Logility is a wholly owned subsidiary of American Software, Inc. (NASDAQ: AMSWA), named one of the 100 Most Trustworthy Companies in America by Forbes. For more information about Logility, call 800-762-5207 USA or visit http://www.logility.com.

ENDS

THE Australian Retailers Association (ARA) strongly urges the Senate Education and Employment Committee’s recommendations in the Penalty Rates Report be rejected, as the ARA believe the Labor majority on the Committee have no understanding of the Penalty Rates Decision’s positive impact on employment in the retail industry.

ARA Executive Director, Russell Zimmerman said the Committee’s recommendations to overturn the Penalty Rates Decision would severely damage the pathways and opportunities for employees within the retail sector.

“It baffles us how the Labor Members of the Committee want to overturn the Fair Work Commission’s Penalty Rates Decision, as for more than a century the Government have entrusted this expert industrial body to fairly balance the interests of employers and employees” Mr Zimmerman said.

“It should be noted that the current Fair Work Commission was set up by past Prime Minister Julia Gillard, whilst she was Minister for Employment, to be the independent umpire in determining significant employment conditions such as penalty rates.”

“We are extremely shocked that the Labor Members on the Senate Committee did not refer to the ARA for any questions about the Penalty Rates Decision, as we have been the peak body association leading this case and its positive impact on employment within the retail industry.”

The ARA and its members have previously called on all sides of Government to implement the Productivity Commission's recommendations on Penalty Rates and wage agreements to improve efficiency for retailers and employees across the sector.

“As Enterprise Bargaining Agreements (EBA’s) in the retail industry have fallen to drastic levels, the ARA congratulate the Committee in recognising the ineffectiveness of the current EBA system and the Better-off Overall Test (BOOT),” Mr Zimmerman said.

“However, the ARA also note that the Committee has not given any recommendations on how to improve the EBA system andhow to get bargaining back on track.”

The ARA and its members want to see the Productivity Commission's recommendations enacted to create a fairer, more effective EBA system to guarantee a bright and prosperous future for retail employees.

“The current EBA approval system is too inflexible and we urge the Committee to provide a more practical bargaining system for the retail industry and its employees,” Mr Zimmerman said.

The ARA have been the only retail association that has participated in the inquiry, and continues its strong tradition of advocating for wage fairness in the retail industry.

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $310 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

ends