ASIC's revised dispute resolution process will impose a significant cost for Australian financial services licensees who are required to be members of an external members of an external dispute resolution scheme (EDR), according to the FPA.
As a result the association expects that consumers will bear the burden.
"In its move to improve consumer access to dispute resolution schemes, ASIC has more than doubled the number of claims that will be lodged, it has increased the amount of compensation payable and it has changed the definition of a complaint," FPA chief Jo-Anne Bloch said.
There are also investigations within Treasury for a post-event compensation scheme, according to the FPA.
We now want to know who will pay for all of these changes which will result in increased costs. Is the Government increasing funding to the EDR schemes for the significant increase in work, or are members going to have to pay higher levies," Bloch said.
Professional indemnity (PI) insurance premiums will also rise as a result of the changes.
"We are extremely disappointed that no mention has been made of our significant concerns with the transparency and fairness of the regime, which would have facilitated a more effective scheme and one that has the confidence of its members," Bloch said.
"The FPA has consistently argued against these changes and has focused on concerns about the impact the changes will have on the ability to meet compensation claims through PI insurance."
The FPA has called for a broader review of financial services and retail client compensation.
Under ASIC's changes, all schemes will be required to deal with claims up to $500,000, although the compensation amount per claim will be payable to a minimum of $280,000. This will take effect from January 2010.
The EDR scheme will have discretion whether or not to cancel memberships and there will be changes to the definition of 'complaint' for Internal Dispute Resolution purposes that align with ASIC's ISO standards
