The Financial Ombudsman Service says the number of disputes it is asked to mediate have continued to rise although their composition has changed.
In its 2011–2012 Annual Review, FOS revealed that it had received a total of 36,099 disputes, up 19 per cent on 2010–2011. This followed a 27-per-cent increase in 2010–2011 on the previous year.
FOS accepted 25,298 disputes into its formal dispute-resolution process, where customers had not been able to resolve a dispute directly with their financial services providers. This was up 24 per cent on the previous year.
During the year FOS resolved 24,983 accepted disputes, which was up 31 per cent on the previous year.
“We saw a continued increase in disputes coming to and being resolved by FOS in the last year. The composition of disputes has also changed over the last few years, with credit products and disputes lodged by people in financial difficulty making up a larger proportion of those we handled,” said chief ombudsman, Shane Tregillis.
Tregillis added that he was pleased to see a continued improvement in the number of accepted disputes being resolved by agreement.
“In the last year, disputes resolved by agreement between parties rose to 74 per cent, up from 71 per cent in 2010–2011,” he said. “This reflects our focus on the importance of early, cooperative resolution, which includes working with applicants and financial firms to reduce the time taken to resolve disputes.”
Most common disputes
The greatest number of disputes received in 2011–2012 was about credit products, which comprised 50 per cent of all disputes accepted by FOS. This compares to 48 per cent in 2010-2011.
Of the 13,242 credit disputes accepted, 12,158, or 92 per cent, were about products such as home loans (40 per cent), credit cards (34 per cent) and personal loans (14 per cent).
The second highest dispute area for FOS was general insurance ,with 7595 disputes accepted about general insurance products (29 per cent of all accepted disputes), a 35 per cent increase on the previous year.
This significant increase is related to natural disasters that hit Australia between 2010 and 2012.
By the end of 2011-2012, FOS had received 1141 disputes related to the Queensland floods, 254 related to Victorian floods and storms, 186 from Cyclone Yasi and 191 related to the Melbourne Christmas Day storms.
“We are aware of the impact these events have had on thousands of Australians, and our teams have worked hard to ensure that these cases are resolved as a matter of priority,” said Tregillis.
“At the same time, we have seen a significant increase this year in the number of general insurance disputes unrelated to natural disasters.”
Tregillis added that a 14-per-cent decrease in investments disputes to 1626, compared to 1886 in 2010-2011, indicated that disputes now appear to be dropping back towards pre-global financial crisis levels.
However, FOS had seen a worrying increase in the number of members involved in these matters becoming insolvent.
“Numbers have more than doubled in the comparable periods, jumping from seven members in 2010-2011 to 18 in 2011-2012,” said Tregillis.
“The upward trend we’ve seen in the number of members going into administration or liquidation has meant that we have either turned applicants away – or where we have issued a favourable decision – applicants have remained uncompensated.”
