In its most recent circular newsletter, FOS revealed that since January 2010, 33 financial services providers have been either unwilling or unable to comply with 133 FOS determinations made in favour of consumers.
At 30 September 2015, the value of the outstanding amounts awarded to consumers was $12,564,736 – but when interest is taken into account the real value of the uncompensated loss is $16,592,457.
“Unpaid determinations represent 23.17 per cent of all determinations issued in the investments and advice area, and 58 per cent of these relate to disputes in the financial planning and advisory sector. This is despite the small number of financial services providers involved,” said FOS.
However, FOS revealed that “for the first time since reporting on this issue began”, there have been no incidents of non-compliance since the last quarter’s report.
“There have been some partial payments made by financial services providers on the list (or their insolvency practitioners),” said FOS.
“Only a very small percentage of all FOS members are involved, and these figures represent only a small proportion of all the awards we issue across all our jurisdictions in banking, insurance, life insurance and investments.”
This is a real problem as the AFSL operators know that if it all goes terribly wrong they can simply fold and there will be no one left to hold the can.
We have seen instances where the AFSL has either not had or indeed got rid of their PI insurance when times got tough thus leaving the consumer stranded without “real” financial recourse.