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Give ASIC consumer redress powers: FOS

  •  
By Tim Stewart
  •  
3 minute read

ASIC should be granted explicit power to put in place consumer redress schemes where there are widespread or regular financial services failures, argues the Financial Ombudsman Service (FOS).

In its submission to the Financial System Inquiry, FOS said "difficult issues can arise" where there are large numbers of disputes arising from failings in a financial services provider (or service), "which requires a substantial number of customers' claims of loss to be assessed".

"Currently, ASIC uses enforceable undertakings for this purpose and has done so successfully on a number of occasions," said the submission.

In contrast, the UK regulator has an explicit power to put in place a consumer redress scheme where there is widespread failure, said FOS.

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"[The UK regulator can take action where] consumers have suffered (or may suffer) loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings," said FOS.

A consumer redress scheme is also permitted in the UK,where it is desirable to make rules for the purpose of securing the redress, said the submission.

"The UK regulator also has powers to appoint an external party to undertake an independent review of aspects of a firm's activities (which, for example, cause concern or require further analysis," said FOS.

"This is useful when there are concerns about potentially emerging issues that may result in consumer losses."

ASIC should also have the power to appoint a "skilled person" to review the situation, said FOS.