FOS UNPAID DETERMINATIONS
There is currently a debate about a compensation scheme of last resort being put in place for financial services compensation claims. In this context, it is worth thinking about what the latest statistics from the FOS tell us about the scale of the problem. Between 1 January 2010 and 30 June 2017:
- there were 39 FSP’s who did not comply with 154 Determinations, affecting 218 consumers;
- $14,146,094.22 has not been paid; and
- the area where most of the unpaid Determinations derive from is financial planning.
These statistics hide the true scale of the problem – the issue being that once it becomes apparent that Determinations will not be paid, complaints are abandoned or not commenced at all. I ‘ve acted for a number of clients in this position and I assume that my experience will have been replicated across Australia with the result being that whilst this problem already appears to be significant, it is actually very much worse.
Part of this problem derives from an under-funded ASIC not enforcing the law about having appropriate PI insurance arrangements in place. We don’t need any more laws about this issue or a barely effective scheme of last resort – what is required is aggressive and effective enforcement of the current regime so that financial planning firms actually comply with their obligations about PI insurance.