Analysis of the adviser-client relationship

• Michael Arnold – Ombudsman, Investments Life Insurance & Superannuation, FOS

Dick Viney – Ombudsman, Investments Life Insurance & Superannuation, FOS

Adj Professor Wes McMaster – www.wesmcmaster.com

Agenda

Introduction FOS Key issues in adviser - client relationship Other Feel free to ask questions at any stage

FOS Terms of Reference and process

Different TORs/process depending on whether we received dispute before or after 1 January 2010

1.

Registration

2.

Acceptance(inc jurisdictional

review)

3.

Early resolution

(via Case Manager/concil

iator)

4.

Outcome(via Recommendation/

Determination)

Complaints received pre and post Jan 2010 - process

1.

Initial enquiry(inc jurisdictional

review)

2.

Case Management/

conciliation

3.

Panel investigation

4.

Determination

Some key features of “old” and “new” Terms of Reference - jurisdiction

Complaints received pre 1 January 2010

Complaints received post 1 January 2010

Monetary limits (for financial products other than insurance)

$150k per claim,(excludes interest)

$500k per claim – compensation capped at $150k per claim(from Jan 2012 this will increase to $280k per claim)(excludes interest)

Consequential/indirect loss

Not available Consequential loss – up to $3k

Non-financial loss No compensation available for pain and suffering

Non-financial loss – up to $3k

Time limits Within 6 years Within 6 years or within 2 years of receiving final “IDR response” (as defined)

Some key features of “old” and “new” Terms of Reference - process

Complaints received pre 1 January 2010

Complaints received post 1 January 2010

Time allowed for IDR complaint

45 days in most cases 45 days in most cases

Outcome Adjudicator or Ombudsman issues final decision

• In most cases, a Panel Case Manager issues Recommendation

• If appealed, Ombudsman or Panel issues Determination

Review Matter can return to decision maker(s) on certain procedural fairness grounds

Recommendations can be appealed to a final Determination by either party

Client engagement “Know your client” “Know your product” Formulating advice Delivery of advice Implementation of advice Reviews

Key stages in adviser-client relationship

AFSL liability issues: advisers acting without knowledge/approval of licensee

When investments are frozen Causation and loss The future Recent decisions of note At FOS

Other issues

www.fos.org.au (with search facility for determinations)

www.wesmcmaster.com

Further resources