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Question: Discuss about the Financial Ombudsman Service. Answer: Introduction Financial Ombudsman Service is an independent expert system for resolving of complaints between the customer and the businesses which are providing financial services. This report includes critical evaluation of the case study in which a self-employed person borrows a loan from bank worth $250000 which is secured by mortgage of property. Due to extreme conditions the person was unable to repay the loan and provided the reasons to bank for their inability to repay. But bank was insensitive to the same and thus the person approached a financial ombudsman service (FOS). The role and responsibilities of an FOS is described along with evaluation of a case study is done. It also evaluates the performance of an FOS with respect to current scenario. It is one of the third-party grievances handling system (Gilad, 2008). Financial ombudsman service and its role Financial ombudsman service is an independent expert solving out the problems relating to financial services. It is established by the parliament. When the business and customer are unable to resort the matter FOS shall come into play. It will provide an unbiased view to the problem and have all legal powers to do things right. The service of the FOS can only be taken after the customer has himself complained to the business about his problem and the business is unable to solve the same in eight weeks (Summer, 2010). It shall consider all the relevant laws and regulations, guidance, code of practices and ethical practice relating to business. Its funding is done by the financial service sector which collects the same through fees and statuary levies. The applicants apply free of cost and its cost are met by various financial service providers (Financial Ombudsman Service, 2015). According to Financial Ombudsman Service Australia, 2017 the following types of services are provided by FOS Banking Services. Credit card complaints. Insurances (general and life). Services of financial planning. Investment advices. Financial services in context with breaking of law, breaching code of ethics and sectors not meeting standards of good practice (Financial Ombudsman Service Australia, 2017). In the given case, the bank has mortgaged the property and is not helpful to the customer and not considering the reason for failure to pay and thus he approaches the financial ombudsman service. FOS gives assistance to such customers since it is within its scope and only when the customer and the business have not resolved the same and thus the case qualifies as a customer for FOS (Ali, 2016). Procedure followed by customer The following procedure shall be followed by the customer The customer shall lodge the complaint with FOS by submitting the online dispute form or by email or in writing by downloading the form or by telephone. The following information shall be provided by the customer during lodging of complaint : Name and address of the applicant. Key issues. Name and details of financial service provider. If the provider of service lodges complaint it will obtain written consent of customer and then file the same with FOS. If the applicant requires a representative due to some technical or language difficulties the same shall be allowed under FOS but the charges paid to that representative shall be borne by applicant himself. The customer can apply to FOS within six years from the date the dispute arises. But it will come down to two years in case of credit contract variation. After the dispute is filed with FOS, it registers the same and informs the same to FSP for internally resolving the dispute. (Financial Ombudsman Service Australia, 2017) If the applicant accepts determination, FSP shall sign a Confirmation of settlement and the full and final resolution to the case shall enforce. It shall make applicant sign a deed of release within 14 days and the deed should be consistent with determination formulated. Procedure followed by FOS After the applicant has submitted the dispute the FOS shall follow its procedure to resolve the same- Registration and Referral The first step is to refer the dispute filed with the financial service provider. The FSP after examining the case shall respond back to the applicant as well as the FOS. The FSP shall be given a time limit to respond which is depending on the case but in most cases it is 45 days. But when FSP has already applied the same it will come down to 21 days. If FSP does not respond to dispute within the registration and referral stage the same shall be addressed by the FOS (Financial Ombudsman Service, 2015). Case management When the dispute is not resolved above the same is referred here. The case owner is appointed who reviews all the information relating to the dispute and will figure out the jurisdiction relating to the case for investigating the same. After reviewing the case manager shall inform the details to the applicant and the FOS and will resolve by negotiating, or adding merits to the dispute or conciliation conference (Gilad, 2009). Conciliation conference means an informal discussion by both the parties of the case. It is discussed with a conciliator who is an authorized employee of FOS. It is conducted generally as teleconferencing in which both the parties upheld their views and understand each others issues and then generate a proper response to the same. If the dispute resolves here the same is noted and annexed with the report and referred back to FOS. Negotiation is not as effective as conciliation. If the dispute is not resolved other matters to case are added to form an opinion and resolve the dispute (Ali, 2013). Decision This stage arises when the above two stages are unable to resolve the matter. Merits of the case taking the opinion of both the parties shall be considered and a fair decision will be taken applying proper code of ethics and industry best practices. The decision taken here shall be in the form of determination (Financial Ombudsman Service Australia, 2017).Depending on the nature of complexities the decision shall be taken by ombudsman or the panel, as the case may be. Before making a determination the concerned person shall first advice the parties. After determination is made, further no appeal can be filed by either of the parties. An applicant has thirty days (additional time may be allowed) to accept or reject the same. If he accepts it will be binding on both but if he rejects the same shall not be binding. But accepting and rejecting is done only by applicant, FSP has no power to accept or reject it (Llc, 2010). Evaluation of case study- Financial Difficulty Case 1: Following a Workplace injury Facts of the Case- In the given case the home loan was taken by the applicant and due to some workplace injury they were unable to pay the same but they updated the bank for settlement and made number of calls regarding their difficulty. But bank death very insensitively and does not route their difficulty. Rules and regulations to be followed by the bank- The bank breaches Code of Banking practice which states that when the customer has financial difficulty with the credit facility offered , bank will deploy the repayment plan and if required it will apply hardship provisions of uniform customer credit code. Decision by FOS The applicant filed an application with FOS for resolving this dispute. FOS made a reference to code of banking practice in which it was provided that bank will provide repayment moratorium and the same will be finalized in two months and thus it will give applicant a proper time for disposing their property and repay the loan. This decision was accepted by applicant in resolution to their dispute. Case 2: A refinanced Home loan Facts of the Case- In the given case the home loan was taken by the applicant and they asked the FSP to refinance their loan by offering them to mortgage their property. The FSP approved the refinancing. The applicant was unable to repay the loan and applied to FOS for settlement of the case. The applicant alleged that he should be compensated for the drop in prices of the house property. Rules and regulations to be followed by the bank- The bank credit statement was reviewed by FSP. It was found out that FSP demanded for the documents which were not necessary. And it was even reviewed that the loan given to the applicant was not repaid on time along with interest. As per the ethical practice when the applicant does not repay the same he should not be refinanced with a higher loan at a higher interest. Decision by FOS On the basis of the facts of the case and rules of bank it was concluded by FOS that the applicant shall be compensated for the fifty percent of the loss and bank should be more careful in taking decisions since refinancing at higher interest was not viable. The same was justified and the case was resolved. The FOS has a good track record in creating a just and fair redress system for financial consumers Critical Evaluation A Financial Ombudsman Service is a not for profit organization which provides dispute resolution to its financial customers. It has resorted around150000 disputes every year and providing an unbiased solution to the dispute. The business of resolving the dispute is increasing. It has various merits as applying to a non-government company at no cost; it also provides investigation and conciliation along with bad practices are rectified. But sometimes rapid solutions are required to critical problems which cannot be provided by FOS. Decisions taken by FOS are not binding on the applicant. It is binding only after acceptance of the decision (Legal Commission Services of South Australia, 2012). Statistics provide that ninety percent of the cases are resolved in the earlier stages without intervention of an ombudsman. From the data given above it can be easily depicted that FOS has a good track record and is in process of creating a fair redress system. References Ali, P, Bourova, E, Horbec, J and Ramsay, I,2016, Australia's Financial Ombudsman Service: An Analysis of Its Role in the Resolution of Financial Hardship Disputes, Conflict Resolution Quarterly, 34 (2), 163-168. Ali, S, 2013, Consumer Financial Dispute Resolution in a comparative context, Cambridge University Press, United Kingdom. Financial Ombudsman Service Australia, 2015, Operational Guidelines to the Terms of Reference, Retrieved on 15th August, 2017 from https://www.fos.org.au/custom/files/docs/operational-guidelines-as-at-1-january-2015.pdf Financial Ombudsman Service Australia, 2017, Dispute resolution process in detail, retrieved on 18 Aug, 2017 from https://www.fos.org.au/resolving-disputes/dispute-resolution-process-in-detail/#id=registration Financial Ombudsman Service Australia, 2017, Financial Difficulty. Retrieved on 16th august from https://www.fos.org.au/resolving-disputes/case-studies/#FinancialHardship. 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