FOS has issued its latest list of new definite systemic issues.
Improper collection activity: automated dialler
The financial services provider (FSP) acted in breach of the ASIC debt collection guideline for collectors and creditors by attempting to make excessive contact with its customers through its automated dialler system. The FSP confirmed that its settings permitted collection agents to attempt to make more than 120 calls per month. Under the guideline RG96, unreasonably frequent attempted contact using an automated dialler may amount to undue harassment.
Mistaken internet payment: claim fee
The FSP was charging consumers a fee to handle mistaken internet payment (MIP) claims, contrary to its obligations under the ePayments Code (the Code).
The FSP acknowledged that while the Code prohibited it from charging customers to report a MIP, it argued that it did not preclude it from charging a fee where the customer decided to progress with the claim. This argument was rejected by the Lead Ombudsman on the basis that it did not align with FOS’s interpretation of the Code, nor was it in line with industry practice.
Activity on a foreign exchange trading account
The FSP was not meeting its obligations under ASIC Regulatory Guide 227; Over-the-counter contracts for difference: Improving disclosure for retail customers (RG227), to assess prospective investors’ understanding of the products they were investing in prior to opening an account and engaging in foreign exchange trading. To determine the suitability of the product for the investor, the FSP relied on investors answering quiz questions. However, in many instances, the information provided in the FSP’s initial ‘scripting’ often aided investors with answers to the quiz questions. The Lead Ombudsman was therefore not satisfied that the FSP was adequately assessing prospective investors’ suitability to invest in complex financial products.
Suitability of product: add-on insurance
There were concerns raised about the FSP’s sale of add-on insurance products through motor vehicle dealerships. The FSP confirmed that in the last two years, it has paid its corporate authorised representatives approximately $2.7M in commissions for the sale of add-on insurance, received approximately $10.2M in premiums, and only paid approximately $1.8M in claims. The Lead Ombudsman expressed the view that, based on this information, the sales method was unlikely to properly inform consumers of the low value of the product.