AUSTRALIA

1

• AUSTRALIA

2
A Tale of Scheme Amalgamation

• Colin Neave
• Chief Ombudsman

3
Background

• All firms operating in Australia in the consumer
  Financial Services market must be licensed by the
  Regulator.
• A condition of licensing is that the firm is a
  member of a Regulator approved dispute resolution
  scheme.
• There were seven such schemes, plus a Statutory
  scheme dealing with superannuation, as at 30 June
  2008.
• All those schemes (and Statutory scheme) shared
  services (IT, Call Centre, etc.) pre 30 June
  2008.
• No overt Government pressure for scheme
  consolidation. Rather, subtle Government and
  Regulator pressure.

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Initial Start Up

• The Boards of the three largest schemes agreed to
  consolidate their operations into FOS from 1 July
  2008.
• Two smaller schemes came into FOS from 1 January
  2009.
• Those five schemes have continued to operate
  under pre FOS Terms of Reference, procedures and
  on separate systems but with a common platform.
• All staff transferred to FOS from 1 July 2008.

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Initial Start Up Contd/.

• Ombudsmen heading up the three schemes became FOS
  Ombudsmen from 1 July 2008, with a Chief
  Ombudsman.
• Single Board with Industry Advisory Committees on
  industry sectors lines established.
• Drafting of standard Terms of Reference for FOS
  commenced due for completion June 2009.
• Those Terms of Reference and standard processes
  and procedures will operate from 1 January 2010.

6
Staff/Culture Issues

• Three largest schemes broadly reflected the
  culture of the different sectors of the
  financial services industry.
• They did things differently two had casual
  Fridays, they all had different
  starting/finishing times, some encouraged
  part-time employment one did not.
• Two schemes had ultimate decision-making in the
  hands of a Panel one and the two smaller schemes
  had an Ombudsman decision-making model.
• Pay rates in one scheme were perceived to be
  superior to those in the other two schemes.
• Creating a FOS culture has been a challenge.

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Experience/Advice

• Do not come together till there is agreement on,
  at least, the essential features of Structure,
  Terms of Reference/Rules and Policies and
  Procedures for the new scheme.
• Involve staff extensively in that process but a
  single Board/ Ombudsman/Government needs to take
  hard decisions.
• Settle staffing requirements for the new scheme
  pre merger.