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Financial Services Ombudsman Adopts New Dispute Resolution Model

AUTHOR(S): Carina Lawlor, Michael Byrne
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution, Regulatory and Investigations
DATE: 24.10.2016

Earlier this year, the Financial Services Ombudsman (“FSO”) completed a strategic and operational review of its procedures, which has resulted in a new dispute resolution and adjudication model.

Mediation

The FSO deals with complaints from consumers about their dealings with financial services providers as an alternative route for consumers to resolve disputes outside of the courts. The FSO has always invited parties to consider mediation at the outset of a complaint and before proceeding with an investigation and adjudication. This is a mandatory step in the FSO process and the FSO can only proceed to formally investigate the complaint if the offer of mediation is refused by either party or where mediation is attempted, but is unsuccessful. However, the FSO’s experience has been that while 50% of complainants are agreeable to mediate, financial service providers most often fail to engage in mediation.

To address this, a new dispute resolution model has been put in place since February 2016. Under the new model, mediation, while still voluntary, is now the default option. Previously, parties to a dispute had to expressly opt-in to mediation, now it is an automatic opt-in. The FSO has noted that it “can provide flexible and innovative solutions”, and “can maintain relationships, and save time and money”.

Adjudication

Once all matters have been considered, the FSO communicates his decision by way of written finding. The finding is binding as issued, subject to a right of appeal to the High Court. A significant new change is that the FSO will now provide a preliminary finding to the parties prior to delivering a final finding. The preliminary finding represents an opportunity to the parties to identify any significant errors of law or fact. In taking this step, the FSO is presenting both parties with a final opportunity to make a submission on what they may perceive to be a significant error of law or fact in the preliminary finding before it becomes a final finding and can only be reversed on appeal to the High Court. Before the introduction of this new step, the only remedy available to a disappointed party was the often daunting prospect of an appeal to the High Court.

These new steps are a welcome enhancement of the FSO process. The primacy of mediation has been confirmed as the preferred means of resolving FSO disputes with the new express opt-in mechanism. For those disputes that continue on to adjudication, the introduction of a preliminary finding should result in even more robust final findings and less High Court appeals being undertaken.

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