ARTICLE · 04 DECEMBER 2011

Financial Ombudsman Service increases its maximum award for investment complaints

Colin Biggers & Paisley

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It is likely that more investment disputes will be referred to the Financial Ombudsman Service and fewer to the courts.

AustraliaStrategy

Gavin Creighton

James Stanton

In brief - Significant increase in compensation cap for investment disputes

As of 1 January 2012, the Financial Ombudsman Service (FOS) will be increasing its maximum award amounts. The compensation cap for investment disputes is increasing from $150,000 to $280,000 for complaints lodged on or after that date. It is likely that more disputes will be referred to FOS and fewer to the courts.

Terms of reference of FOS

FOS is an external dispute resolution (EDR) body that has jurisdiction to accept and adjudicate a number of financial, insurance and related disputes.

Under its terms of reference, FOS has the power to award a monetary sum for compensation if it determines that a complainant has proved that a financial or insurance service provider has breached a statutory or common law duty and that this breach caused them loss or damage. The monetary sum is limited to certain amounts under what FOS refers to as its "compensation cap".

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