Insurance Business forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Notify me of new replies via email
Insurance Business | 24 Jul 2013, 12:00 AM Agree 0
More brokers have come forward to criticise FOS over its handling of disputes, claiming that brokers are being unfairly penalised.
  • Broker | 24 Jul 2013, 10:33 AM Agree 0
    I don’t understand the fuss. FOS is a good system that gives our client piece of mind that they are able to get an independent review when they have a dispute. Yes there will be times when clients are being unreasonable and this costs the broker… Welcome to the finance industry. Any good business should factor in expenses relating to this service irrespective of whether they are right or wrong. This has been no industry secret. What is the alternative… No independent dispute resolution service at all?
  • Daniel | 24 Jul 2013, 11:55 AM Agree 0
    A client lodged a dispute with FOS, which was accepted. The dispute was that we did not tell the client that a body corporate should have a bank account, as the claims cheque was made out to the body corporate and not the individual owner of the unit. This was accepted by FOS although it had nothing to do with insurance or what any Broker is required to advise. We still where required to fix a problem that was not our area of expertise. This is the second time FOS has accepted a dispute not involving insurance. We have only had 2 disputes. Both not to do with insurance!
  • Insurer | 25 Jul 2013, 10:01 AM Agree 0
    Welcome to the insurer's world. Broker's will often use the leverage of threatening to go to FOS for a minor claim in order to get it paid - you have to weigh up whether it is worth winning the argument or making a commercial settlement just like any insurer.
  • Andrew Sharpe, partner DLA Piper | 25 Jul 2013, 10:16 AM Agree 0
    My experience of FOS in the area of complaints against brokers has been a generally positive one.

    I do not agree with comments that there is any systemic pro-consumer bias from FOS in the Recommendations or Determinations issued in broker disputes (certainly not the ones in which I've represented broker interests to ensure that relevant information is presented to FOS). That is borne out by the fact that FOS finds more often in favour of brokers than against them.

    Like any external dispute resolution service, the justice doled out can be slightly 'broad brush' at times but that is more than compensated for by the benefits of access to justice and the cost savings compared to the alternative of a litigated dispute.

    I can understand some brokers having concerns as to the level of fees which must be paid regardless of whether the claim had any merit from the outset - particularly where, as some have mentioned, the fees can exceed the amount in dispute which makes it more cost effective to 'roll over' than to successfully defend the dispute and get stuck with a large fee. There may be something to be said for FOS to play a stronger hand during the conciliation phase to discourage clearly unmeritorious claims.

    One area that could be improved is where FOS simultaneously accepts disputes from a consumer against both the insurer and the broker. These disputes are dealt with separately by different FOS divisions. In my view, FOS should adopt a practice guideline by which, where a consumer seeks to ventilate a dispute about coverage against the insurer and a dispute about lack of coverage against a broker, FOS should pre-register the broker dispute (without fee to the broker), but not not proceed with its usual processes, until FOS has determined the dispute against the insurer. If the consumer's dispute against the insurer succeeds, it is unlikely that the consumer will seek to pursue its dispute against the broker.

  • Les Taylor | 25 Jul 2013, 04:22 PM Agree 0
    I think the point is the lack of procedural fairness. The FOS will invoice the broker or Insurer whether the FSP should win or lose. Vexatious claims by clients are being supported by the FOS. Financial Planners and other finance businesses similarly find the FOS to be unfair and one-sided. Brokers are not alone in complaining. If, instead, we had a tribunal for quick resolution I would welcome the change even if it cost more to lose. At present the time delay at the FOS is so immense that they are being criticised by the consumer too. The FOS is broken and needs fixing.
Post a reply