FOS systemic issues update 2014

FOS has reported new systemic issues for financial service providers:

  • Policies for dealing with customers in financial difficulty: FOS is concerned at an FSP’s apparent inability to vary a regulated credit contract when a customer in financial difficulty requested a variation (as permitted by section 72 of the National Credit Code). If a customer was experiencing hardship and wished to reduce the contractual amount payable under the remaining loan term, he or she must re-finance. This process involves satisfying the FSP’s usual lending criteria as well as paying an establishment fee.
  • Inappropriate charging of fee: FOS is concerned about an FSP’s failure to account for the Reduced Input Tax Credit (RITC) entitlement in its demand for payment of GST on debt recovery costs.

FOS has also identified the following possible systemic issues:

  • Improper Collection Activity, in particular while a dispute is open with FOS.
  • Conduct of employees and authorised representatives, in particular regarding the management of personal superannuation funds.
  • Processing errors, such as apparent errors in direct debit arrangements and the process for managing lost cheques.
  • Disclosure of account operation and features including an account daily limit operation.
  • Compliance with the National Credit Code and providing loans that may circumvent the interest rate cap in New South Wales.
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