FOS broker dispute numbers fall

The Financial Services Ombudsman (FOS) Annual Review reveals that even as overall dispute number continue to rise, general insurance broker related disputes in 2017-18 have seen an 18 per cent reduction from 2016-17 from 208 to 170.

FOS received a total of 43,684 disputes and closed 43,325 disputes in 2017-18. These figures reflect an 11 per cent increase on the number of disputes received during 2016-17 and a 10 per cent increase on the number of disputes closed in 2016-17.

FOS accepted 8,603 general insurance disputes in 2017-18. This was 2 per cent less than last year, following increases of 26 per cent and 28 per cent in the previous two years.

Across all general insurance disputes in 2017-18, a total of 170 were between general insurance brokers and their customers. The most common insurance products in these disputes were commercial property, motor vehicle (comprehensive), home building and residential strata title disputes. The main issue was claim amount.

In keeping with past years, the vast majority (92 per cent) of general insurance disputes accepted related to domestic insurance. More than two-thirds (70 per cent) of general insurance disputes concerned the FSP decision, which in most cases related to an FSP’s decision to decline a claim or the claim amount.

The type of insurance policies most people complained about were motor vehicle comprehensive (32 per cent), home building (32 per cent) and travel insurance (10 per cent). In more than two-thirds (70 per cent) of domestic insurance disputes, consumers complained about the insurer’s decision. Most disputes (88 per cent) were lodged against an insurance company and 9 per cent involved an underwriting agency.

What the disputes were about

FOS accepted 22,962 disputes into Case Management in 2017-18. This was 2 per cent more than last year.

Type of disputes No. of disputes

2017-18

Change from

2016-17 (%)

Percentage of disputes 2017-18
Credit 11,295 3 43
General insurance 8,603 -2 32
Deposit taking 2,195 18 8
Payment systems 1,656 24 6
Investments and advice 1,524 18 6
Life insurance 1,117 10 4

 

Across all these disputes, the main products in dispute were credit cards (15 per cent of all disputes), home loans (10 per cent) and motor vehicle – comprehensive insurance (10 per cent). The main issues were denial of claim (8 per cent), claim amount (7 per cent) and failure to follow instructions/agreement (7 per cent). Of all these disputes, banks were involved in 43 per cent, general insurers 28 per cent and credit providers 9 per cent.

The Code Compliance and Monitoring team at FOS (Code team) supports independent code compliance committees who monitor compliance with standards set out in five industry codes of practice including the Insurance Brokers Code of Practice. The Code team conducted 292 new investigations into allegations that a financial firm had breached one or more code obligations, and as a result of these investigations, 98 breaches were confirmed.

The proportion of disputes resolved when referred back to financial firms increased to 44 per cent compared to 43 per cent last year. These disputes are resolved by the firms and the consumer working together. This highlights the value of the firms considering disputes before FOS becomes involved.

The proportion of disputes closed by agreement between the applicant and the financial firm was 60 per cent, the same as last year. The proportion of disputes resolved through a FOS decision – because an agreement could not be reached – was 17 per cent (compared with 15 per cent last year).

The systemic issues team received 1,037 referrals of possible systemic issues from FOS dispute handling teams in 2017-18 (compared with 1,476 last year).

This Annual Review is the last one for FOS. From 1 November 2018, a single financial services dispute resolution scheme, the Australian Financial Complaints Authority (AFCA), will begin receiving disputes. AFCA replaces FOS, the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT).