Media release - CIO releases its Annual Report on Operations 2015-16

 The Credit and Investments Ombudsman (CIO) has today released its  Annual Report on Operations for 2015/16.

Key highlights for the year include:

  • nearly 27,000 enquiries were received, up 23.4%,
  • 4,760 complaints were made against financial services providers,
  • financial hardship complaints have decreased to 21% of all complaints received, but still feature as one of the largest sources of complaints,
  • credit reporting complaints have climbed to 29% of all complaints received,
  • sectors attracting the largest number of complaints were debt purchasers and collectors (42%), residential mortgage lenders and mortgage managers (14.5%), and consumer retail finance providers (7.8%),
  • nearly 23,000 financial services providers are now members of CIO,
  • 61% of complaints were resolved in the consumers’ favour,
  • consumers received $5.8 million in refunds or compensation, and
  • 57 systemic issues were reported to ASIC, a number of them have been the subject of regulatory action, including remedial outcomes.

“In the 2015/16 financial year, consumers lodged 4,760 complaints with CIO. 61% of complaints were resolved in the consumers’ favour, resulting in consumers receiving $5.8 million in compensation or refunds. It’s no wonder that 66% of consumers indicated that they were satisfied with our services,” said Mr Raj Venga, CIO’s Ombudsman.

Systemic issue investigations remained a core focus for CIO because they have the potential to cause widespread harm. CIO identified 57 definite systemic issues in the 2015/16 financial year, an increase of 84%.

“Our systemic issues investigations led to refunds or compensation being paid to consumers, as well as other remedial outcomes,” Mr Venga added.  

The systemic issues identified related predominantly to responsible lending, credit reporting, debt collection, industry complaint handling systems, and other poor industry practices.

“These positive outcomes underscore CIO’s success in providing effective dispute resolution services to consumers and their financial services providers.
“These outcomes would not have been possible had CIO not led the way with a number of initiatives since its inception, such as:

  • dealing with financial hardship complaints: up to a third of all complaints received by CIO historically would otherwise have been excluded,
  • dealing with complaints even when legal proceedings have already commenced: 10% of complaints would otherwise have been excluded, and
  • requiring an FSP to cease all enforcement action once a complaint is received by CIO: this is 25% of all complaints CIO receives.

“More recently, CIO has taken leadership by amending its terms of reference to enable it to expel a financial services provider who fails to implement a remediation program recommended by CIO to address a systemic failing. This will enable CIO to impose remediation orders in its own right without having to refer matters to regulators for enforcement.

“These initiatives have spurred reform and raised best practice in other parts of the Ombudsman sector, and in so doing, produced ongoing benefits for consumers and small businesses.

“Any move to consolidate the two existing finance sector Ombudsman schemes, as being suggested by some, would stifle innovation and generally result in less accountability. A single scheme would no longer be subject to benchmarking against an alternative scheme. Turnaround times, service levels and continuous improvement would inevitably suffer,” Mr Venga continued.

“Submissions to the present review of EDR schemes show that industry associations and individual providers covering about 98% of the operators outside the major banks are in favour of retaining the existing regime of two ombudsman schemes.

“It is no coincidence that smaller financial services providers, including fintechs, looking to disrupt the major banks and bring increased competition to the financial sector are resoundingly in favour of retaining the existing regime.

“The narrative on this issue is very clear: those financial services operators competing with the major banks to deliver consumers a better deal and a more competitive financial system are in favour of the present two-Ombudsman scheme model. Only the incumbent major banks think that a single scheme is a good idea”, Mr Venga added.

Follow this link to download a full copy of the report
Annual Report on Operations 2015-2016 [PDF 16 MB]