One of the key recommendations from the Ramsay Review (review of the financial system external dispute resolution of complaints framework) is to enhance access to redress for small business. As part of our submission to the Review, we undertook modelling to determine what the thresholds should be. Our analysis indicated that broadly 98 per cent of business customers have a credit facility limit under $5million, and broadly 99 per cent of business customers have a credit facility limit under $10 million. Our analysis supports the position that thresholds need to increase to meet the needs of consumers and small businesses.
FOS is therefore strongly supportive of the Panel’s final recommendations, which the Government has accepted which will see the ability for the new EDR body to accept small business credit facility disputes for credit facilities up to $5 million (an increase of 250 per cent relative to the current limit) and have access to a compensation cap of up to $1 million (an increase of 224 per cent relative to the current cap).
Moreover, the Panel has also recommended that there should be no monetary limits and compensation caps for disputes about whether a guarantee should be set aside where it has been supported by a mortgage or other security over the guarantor’s primary place of residence. This would apply to small business disputes as well as general consumer disputes. This too was an issue FOS raised with the Panel, which has now been addressed.
Once implemented, these changes will see enhanced access for small businesses, which along with consumers, should be able to have disputes with their financial services provider resolved in a fair, open, simple and adaptable manner, so they can get on and run their business, employing people and generating opportunities. The Government position is that the new one stop shop body should be in place by 1 July 2018. FOS looks forward to working closely with a wide range of stakeholders to ensure that the new body can provide fair, open, simple and adaptable dispute resolution services to both consumers and small businesses.
Shane Tregillis, Chief Ombudsman, Financial Ombudsman Service Australia
