CREDIT AND INVESTMENTS OMBUDSMAN. our work. Annual Report on Operations 2015/ / /18 ANNUAL REPORT ON OPERATIONS

Transcription

1 CREDIT AND INVESTMENTS OMBUDSMAN our work Annual Report on Operations 2015/16

2 CREDIT AND INVESTMENTS OMBUDSMAN Abbreviations AFS Australian Financial Services ASIC Australian Securities and Investments Commission CALD Culturally and linguistically diverse CIO Credit and Investments Ombudsman EDR External dispute resolution FSP Financial services provider IDR Internal dispute resolution OAIC Office of the Australian Information Commissioner TTY Teletype writer TIS Translating and Interpreting Service 2

3 CREDIT AND INVESTMENTS OMBUDSMAN Contents Member FSPs 2 Enquiries 2 Our process 3 Complaints received 5 Demographics 5 Purpose of the financial service 6 Who were the complaints about 6 Types of complaints made 7 Complaints in progress 8 Age of open complaints 8 Resolutions 9 Resolution times 9 Outcomes 10 Our jurisdiction 12 Systemic issues 14

4 CREDIT AND INVESTMENTS OMBUDSMAN Member FSPs We can deal with complaints about FSPs who are CIO members. At 30 June 2018, we have 25,505 FSP members. CIO has many different kinds of members, including: Lenders (residential and commercial mortgage providers, personal loan and credit card providers, small amount lenders and pawn brokers) Mutual banks, credit unions and building societies Finance brokers Securitisers Lenders mortgage insurance providers Lessors, including commercial equipment financiers Retail finance providers, including rental and lease providers Motor vehicle finance providers Debt purchasers and collectors Timeshare providers and timeshare financiers Financial advisers Accountants Responsible entities of managed investment schemes Credit reporting bodies Year Members 2013/14 18, /15 20, /16 22, /17 24,808 25,505 Enquiries Every year, we take phone calls from thousands of consumers. This year, we received 25,965 calls (0.3% more than last year). State Complaints Population NSW 31.3% 32.0% VIC 29.5% 25.8% QLD 20.8% 20.0% WA 9.1% 10.4% SA 5.7% 7.0% ACT 1.5% 1.7% TAS 1.2% 2.1% NT 0.6% 1.0% Overseas 0.3% - TOTAL 100% 100% 42

5 CREDIT AND INVESTMENTS OMBUDSMAN Complaint handling process (other than for financial hardship complaints) BEFORE MAKING A COMPLAINT TO US Before making a complaint to us, the consumer should first give the FSP an opportunity to resolve the complaint. The consumer should contact the person they originally dealt with or the FSP s customer complaints area to discuss their complaint. If the complaint remains unresolved, or if the FSP does not respond, the consumer can lodge their complaint with CIO. AT ANY TIME DURING THE COMPLAINT The parties may reach an agreement to resolve the complaint. We may close a complaint if the consumer withdraws their complaint or stops responding to our communications. our work We may close a complaint if the information we have indicates that it is not one we can continue to deal with under our Rules. The consumer can ask for this decision to be referred to the Ombudsman for Determination. 1 VALIDATION When a complaint is made to us Within 48 hours of a complaint being made, it is registered into our complaints handling database. Notices are sent to the FSP and consumer confirming receipt of the complaint. The FSP has 7 days to provide us with a copy of its IDR response. The FSP can also use this time to try to resolve the complaint before we progress it. If the complaint is not resolved, or if the information received does not indicate that the complaint should be closed under our Rules, the complaint will be moved to the next stage. For complaints where the consumer is seeking less than $3,000 or the complaint is about a credit listing or enquiry, we may decide to deal with the complaint using our Expedited Process.

6 CREDIT AND INVESTMENTS OMBUDSMAN Complaint handling process (continued) (other than for financial hardship complaints) 2 INVESTIGATION We investigate the complaint by requesting information from the FSP and consumer, or by asking targeted questions. We want to understand what the consumer is claiming, what is the FSP s position, and asking both parties for information to support their claims. Any response received from one party will be referred to the other party to give them an opportunity to reply. CIO may give a preliminary assessment to assist negotiations. If the complaint cannot be resolved, we will make a finding or recommendation on the merits of the complaint. If the parties do not accept the finding or recommendation, then the complaint will be moved to the Determination stage. 3 DETERMINATION The Ombudsman will issue a Determination that sets out how the complaint should be resolved. If the consumer does not accept the Determination, the complaint is closed and the consumer is free to pursue their complaint elsewhere. If the consumer accepts the Determination, the FSP is bound by it. Once the FSP has given effect to the Determination, the complaint is closed. 4

7 CREDIT AND INVESTMENTS OMBUDSMAN Complaints received We received 6,293 complaints in. This is: 6.8% more than in 2016/17, and 32.2% more than in 2015/16. Number of complaints received over a five year period Demographics Gender of the consumer Complaints 2013/14 4, /15 4, /16 4, /17 5,892 6,293 Where consumers are from We operate nationally. Generally speaking, the number of consumers who made complaints in each state or territory was broadly reflective of that state or territory s population proportionate to Australia s total population. These statistics may also reflect the level of consumer awareness about our services in each of the states and territories. Our processes are informal and we do not need parties to physically attend our offices. We communicate by telephone, , fax and post. This means that consumers and FSPs in remote locations can readily access our services. In 1.9% of complaints, consumers declined to tell us which state they were from. These cases have not been included in the figure above. In the last 12, we received more complaints from men (60%) than women (40%). For jointly-held accounts, the consumers generally nominated one account holder as the main contact. Age of the consumer The average age of a consumer was 42 years. Most consumers (57.6%) were in their 30s or 40s. Younger adults are unlikely to have acquired a full range of financial products and are therefore less likely to have complaints about FSPs. State Complaints Population NSW 31.3% 32.0% VIC 29.5% 25.8% QLD 20.8% 20.0% WA 9.1% 10.4% SA 5.7% 7.0% ACT 1.5% 1.7% TAS 1.2% 2.1% NT 0.6% 1.0% Overseas 0.3% - TOTAL 100% 100% complaints Age group % Under % 20s 15.6% 30s 32.2% 40s 25.4% 50s 17.5% 60s 6.6% 70s and over 2.6% TOTAL 100%

8 CREDIT AND INVESTMENTS OMBUDSMAN Interpreters CIO makes the Translating and Interpreting Service (TIS) available to consumers for free. Consumers requested interpreters in the languages below. Our website also contains an overview of our services and our complaints forms in 22 languages. Language Chinese (Cantonese or Mandarin) Purpose of the financial service Number Arabic 10 Vietnamese 5 Serbian 2 Turkish 2 Filipino 2 Samoan 1 Hindi 1 Italian 1 Croatian 1 Dinka 1 Greek 1 Bengali 1 Hazaragi 1 Spanish 1 Thai 1 Tamil 1 Russian 1 Lao 1 Malayalam 1 Pashto 1 Other 4 TOTAL 59 The table below lists the purposes for which consumers sought the financial services they subsequently complained about. Purpose Number % Consumer 5, % Commercial % Investment % Non-member complaints % Total 6, % 19 Who were the complaints about The table below sets out the percentage of complaints we received about different types of FSPs, which reflects the types of products and services provided. Type of FSP Number % Debt purchasers and collectors* Motor vehicle finance providers Residential mortgage lenders and managers 2, % % % Credit reporting bodies % Small and medium amount loan providers % Brokers and aggregators % Consumer lease providers % Personal loan providers % Credit or charge card providers Authorised deposittaking institutions % % Privacy Act participants % Timeshare providers and financiers Financial planner and advisers Credit repair and debt mediation service providers Vendor finance providers Commercial finance providers Lenders' mortgage insurance providers % % % % % % Other % Non-Members % TOTAL 6, % * The complaint may relate to the conduct of the debt purchaser or the original credit provider. In most instances, we require the debt purchaser to deal with complaints about the original credit provider s conduct. 6

9 CREDIT AND INVESTMENTS OMBUDSMAN Types of complaints made The table below sets out the top 12 types of complaints we received. Consumers often raise more than one claim in their complaint. The percentages referred to relate to the number of claims made by consumers within complaints, and not the total number of complaints. Issues % Credit reporting 27.3% Financial hardship 17.4% Inappropriate finance, including responsible lending 8.5% Collections - disputed debt or amount 8.0% Collections/enforcement conduct 7.2% Fees or interest 7.2% Conduct during application process 3.6% Withdrawals and repayments 3.0% Poor customer service, including failure to provide service 2.8% Misrepresentation/misleading conduct 2.8% Failure to act with due skill, car and diligence 2.3% Breach of privacy 1.5% Other 8.4% Total 100% complaints

10 CREDIT AND INVESTMENTS OMBUDSMAN Complaints in progress Stage of open complaints As at 30 June 2018, we had 2,398 complaints. The majority of open complaints were in the early stages of our dispute resolution process (see table below). We continue to take an active role at each stage of our process, including the Validation and IDR stages. This reflects our aim to resolve complaints as quickly and efficiently as possible. For more information about each stage of the CIO process, please refer to page 5. Complaint stage Number 2016/ /16 Validation IDR % 17.9% 19.0% Validation No IDR % 39.2% 49.4% Investigation % 38.5% 30.1% Determination % 4.4% 1.5% Total 2, % 100% 100% Age of open complaints As at 30 June 2018, 49.1 % of our open complaints were less than three old and 67.0% were less than six old. When we calculate the time taken to resolve a complaint, time starts from the day we receive it, even though in almost half the cases the complaint is first referred back to the FSP s IDR procedures before we start our investigations. We do this because, as far as the consumer is concerned, the complaint will have been with us from the date it was lodged with us. Open cases Number % Under 3 1, % % % % % Over % Determination % TOTAL 2, % Once we have completed our investigation and, if our formal written decision is in the FSP s favour, the consumer can ask for their complaint to be referred to the Ombudsman for a Determination. Under 3 Up to 6 Up to 9 Up to 12 Up to 18 Over / / ,

11 CREDIT AND INVESTMENTS OMBUDSMAN Resolutions Complaints resolved In, we investigated and resolved 6,049 complaints. This is: 7.2% more than in 2016/17, and 45.9% more than in 2015/16. Number of complaints resolved over a 5 year period Year Complaints 2013/14 4, /15 4, /16 4, /17 5,642 6,049 Resolution times In : we closed 64.5% complaints within three, we closed 80.0% within six, the median number of day it took to resolve a complaint was 60 (about 2 ), and the average number of day it took to resolve a complaint was 124 (about 4 ) complaints Time taken Number % Up to 3 3, % % % % % Over % TOTAL 6, % Under 3 Up to 6 Up to 9 Up to 12 Up to 18 Over /16 2, /17 3,439 1, ,

12 CREDIT AND INVESTMENTS OMBUDSMAN Outcomes In 2017/2018, 88.2% of complaints which were within our jurisdiction (and which were not discontinued) were resolved by agreement between the parties. A further 1.2% of complaints were resolved in the consumer s favour as a result of a decision made by us. Outcome Number % of complaints we could deal with % of all complaints closed Resolved by agreement 3, % 63.5% A complaint may be resolved when the consumer and the FSP agree to a mutually acceptable outcome. This type of outcome may involve us: investigating the claims raised by the consumer, making informal recommendations on how the complaint should be resolved, and/or facilitating negotiations between the parties. Decision made in consumers favour % 0.9% A complaint may be resolved by a formal written decision in the consumer s favour after a full investigation of the complaint. Before issuing a written decision in the consumer s favour, we explain our view to the FSP and then give them an opportunity to reconsider their position. In most cases, the FSP accepts our view and agrees to the outcome we informally recommended. When this occurs, we record the outcome as Resolved by agreement (see above), and a formal written decision is not required. If the FSP does not accept our informal recommendation, we issue a formal written decision which may be: an Expedited Ruling: An Expedited Ruling can be issued for small claims of less than $3,000 or where the complaint is about a credit listing or enquiry. If the consumer accepts the Ruling, the FSP is bound by it. Otherwise, the FSP is not bound by it, the complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. a Recommendation: A Recommendation is a statement as to what we consider would be a fair outcome to resolve the complaint. The parties are not bound by the Recommendation and may agree to a different but mutually acceptable outcome. If the parties do not accept the Recommendation and the complaint is not otherwise resolved, the complaint may be referred to the Ombudsman who will issue a Determination. a Determination: The Ombudsman issues a Determination in the final stage of the CIO process. If the consumer accepts the Determination, the FSP is bound by the decision set out in the Determination. If the consumer does not accept the Determination, the FSP is not bound by it. The complaint is then closed and the consumer is free to pursue their complaint in another forum, such as a court. Decision confirming FSP s offer % 0.2% Where the FSP makes an offer to resolve the complaint, and we consider that the offer is reasonable after reviewing the range of likely outcomes that may be achieved if the complaint were to proceed, we may recommend to the consumer that they accept the FSP s offer to settle their complaint. The consumer is not bound by the Recommendation. If the consumer does not accept the Recommendation, the complaint is closed and the consumer is free to pursue their complaint in another forum, such as a court. Decision complaint not substantiated % 7.4% A complaint may be resolved by CIO making a formal written finding in the FSP s favour after a full investigation of the complaint. We give the consumer our reasons for making the finding, an opportunity to respond to it, and an opportunity to request that it be referred to the Ombudsman for Determination. Total 4, % 72.0% 10

13 CREDIT AND INVESTMENTS OMBUDSMAN Discontinued cases 1,033 complaints were discontinued because: the consumer did not respond to our repeated attempts to contact them, the consumer withdrew their complaint, or the complaint was not made against the appropriate FSP. Outcomes Number % of all complaints closed No response from consumer Complaint withdrawn CIO requirement not met % % % TOTAL % complaints Where a complaint is not made against the appropriate FSP, we help the consumer to identify the correct respondent and, if necessary, refer the consumer to the appropriate complaints body. Outcomes Number % of all complaints closed Discontinued - inappropriate respondent %

14 CREDIT AND INVESTMENTS OMBUDSMAN Our jurisdiction to consider certain complaints The CIO Rules set out the types of complaints that we can and cannot deal with. For example, we can only deal with a complaint if it is about an FSP who is a CIO member. In, there were 667 complaints that we could not consider. This represents 11.0% of the complaints we Jurisdiction reason Number % Inappropriate forum % If we consider that the complaint would be more appropriately dealt with in another forum such as a court, tribunal or other dispute resolution scheme, we may close the complaint and direct the consumer to the other forum. For example, some of our debt purchaser members purchase utilities and telecommunications debts. If the complaint is about the quality of the service provided by the utilities or telecommunications provider, we may consider it more appropriate for the complaint to be dealt with by one of the energy and water ombudsman schemes or the Telecommunications Industry Ombudsman. Not a CIO member % We can deal with complaints about any of the FSPs who are members of CIO. However, we cannot deal with a complaint where the business being complained about, or their Australian credit licensee or their Australian financial services licensee, is not a member of CIO at the time the complaint was made to us. Not a financial service % Our role is to deal with complaints about the financial services provided by an FSP. We cannot deal with complaints about a service or product that is not a financial service. Complaint made after time limit % A complaint generally needs to be made within six years of when the consumer first becomes aware (or should have become aware) that they suffered a loss. Not seeking compensation or order % We are sometimes asked to monitor or investigate the conduct of an FSP or to issue fines or cancel the FSP s licence on the basis of alleged misconduct. It is not our role to regulate the financial services industry. This is the role of ASIC and these types of complaints are more appropriately directed to ASIC. Already decided in a court, tribunal or other forum % If the claims raised by a consumer have already been decided in a court, tribunal or other forum, we cannot deal with the complaint again. Complaint made by third party % We cannot deal with a complaint if the person making the complaint is not the person to whom the financial services directly relate. For example, we cannot deal with a complaint made by a borrower s son or daughter if the son or daughter is not a borrower, mortgagor or guarantor on the loan. The borrower s son or daughter can make the complaint on the borrower s behalf if the borrower has authorised them to do so. Previously dealt with CIO 7 0.1% Except where the consumer is about financial hardship or there are exceptional circumstances, we will only deal with a complaint once. Not consumer or small business, as defined 6 0.2% We can deal with complaints made by most individuals and small businesses, but a person may sometimes be outside the definition of a consumer under our Rules. Loss exceeds $500, % We will only deal with a claim if the consumer s loss does not exceed $500,000. Improper purpose 4 0.1% We will deal with a complaint where the consumer has made it for the purpose of resolving it; not for a collateral purpose. Scheme as whole 4 <0.1% 12

15 CREDIT AND INVESTMENTS OMBUDSMAN We will no deal with a complaint if it relates to the management of a common fund or management of a managed investment scheme as a whole. For example, if the complaint relates to a management or commercial matter that concerns the day to day operation of the fund or scheme, or applies to or affects all members of the fund or scheme. Transaction outside Australia 3 <0.1% We will only deal with complaints where the contract or obligation arises under Australian law. Where the complaint relates to a security over property, we will only deal with the complaint if the security property is in Australia. Privacy Act participant not a privacy related complaint 2 <0.1% We have FSPs who are not traditional FSPs. For example, there are businesses which sell goods or services, the payment of which is deferred. These businesses may need to be a member of an external dispute resolution scheme recognised by the OAIC (like CIO) in order to participate in credit reporting. For these FSPs, we will only deal with a complaint about them if the complaint is about a right or obligation under the Privacy Act. Unable to locate FSP 2 <0.1% We have limited ability to deal with a complaint if we cannot locate the FSP. FSP is or becomes insolvent 1 <0.1% If during the CIO process, the FSP is in or goes into external administration, we may close the complaint. Before doing so, we will consider whether there is any benefit to the consumer if we continue to deal with the complaint. Total % complaints

16 CREDIT AND INVESTMENTS OMBUDSMAN 14 Systemic issues As an EDR scheme that is: approved by ASIC, and recognised by the OAIC, we identify and investigate systemic issues and serious misconduct when dealing with complaints. Systemic issues have potential impacts that go beyond a single complaint (for example, where the FSP s conduct has caused other consumers financial loss or even non-financial loss, such as privacy breaches). We may identify a systemic issue: from dealing with a single complaint (such as where a standard form contract does not set out a fee that the consumer is being charged), or if we get a number of complaints about the same issue (such as where an FSP has recommended to a number of consumers that they buy the same complex/ high risk financial product, even though each of the consumers have different goals and objectives). Our investigations into systemic issues over the year We considered 159 potential systemic issue investigations during the year: 58 investigations were carried over from the previous year and we opened 101 new investigations, 63 were closed on a not established basis, 38 were found to be definitely systemic and 58 are ongoing. We considered 63 definite systemic investigations during the year: 25 investigations were carried over from the previous year and 38 were new definite systemic issues (referred to above), 23 have closed and 40 are ongoing. We have summarised some of the key issues identified in relation to systemic issue investigations below. Responsible lending Responsible lending practices in relation to credit contracts and consumer leases were one of the key themes we dealt with in our systemic issue investigations. For example, we identified practices that showed that FSPs were not: making sufficient inquiries about consumers objectives and requirements in relation to credit contract or consumer lease, making sufficient inquiries about a consumer s financial position before providing credit (for example, a number of FSPs applied a benchmark instead of making reasonable inquiries regarding the consumer s living expenses), taking reasonable steps to verify a consumer s financial position before providing credit or credit assistance (for example, a number of FSPs did not take steps to verify the consumer s accommodation expenses before providing credit), or having appropriate regard to statutory presumptions of unsuitability. Debt collection We identified the following poor and inappropriate debt collection practices and required FSPs to implement changes to address these issues: engaging in inappropriate enforcement action, and failure to comply with the ASIC debt collection guidelines. Complaint procedure We identified the following issues with FSPs general complaint handling policies and procedures: some FSPs failed to put enforcement action on hold during internal dispute resolution, and some FSPs failed to appropriately notify consumers of their right to pursue their complaint through external dispute resolution. Financial hardship We identified inadequate financial hardship processes, including: failing to acknowledge requests for hardship assistance, failing to respond appropriately and/or within the required timeframe, and issues relating to financial hardship decline notices. Fees We also considered inappropriate fees, including: inappropriately applied enforcement expenses (for example, some FSPs failed to deduct the reduced input tax credit from enforcement expenses), and non-disclosed fees and charges.

17 CREDIT AND INVESTMENTS OMBUDSMAN Contact us Complaint enquiries Monday to Friday from 9am - 5pm AEST (mobile charges apply) FSP Membership office Monday to Friday from 9am - 5pm AEST Overseas TTY users Speech & hearing impaired Speak and Listen Internet Relay Service: connect to and ask for Telephone interpreter or contact us to have an interpreter arranged Fax Complaints Membership complaints Post PO Box A252 Sydney South NSW info@cio.org.au Online complaint form Complaints can be made by using our online complaint form at More information Visit for information on our processes including complaint decisions, recommendations, position statements and determinations Copyright Credit and Investments Ombudsman Limited ABN PO Box A252 Sydney South NSW 1235

18 CREDIT AND INVESTMENTS OMBUDSMAN Credit and Investments Ombudsman Case Management PO Box A252 E info@cio.org.au Sydney South NSW 1235 T F Copyright Credit and Investments Ombudsman Limited ABN Membership E members@cio.org.au T F