annual review 2002 - financial ombudsman service · 1975 he was appointed managing director for...

ANNUAL

REVIEW

2002

FINANCIAL INDUSTRYCOMPLAINTS SERVICE LIMITED

Pursuant to the Rules of Financial Industry Complaints Service Limited, the following is the Annual Review for the period ending 31 December 2002.

Alison Maynard, Chief Executive

Annual Review

Report from the Chair of the Board of Directors 2

About the Board 3Directors 3Alternate Directors 4Responsibilities of the Board 5Committees 6

Report from the Chair of the Panel 7Objections to Jurisdiction 7Life Insurance 7Other Complaints 7Thanks 8

Chief Executive’s Report 9Independent Review 9Complaints 9The Panel 9Cooperation 9Liaison 10Constitution and Rules 10Systemic Issues and Serious Misconduct 10Legal Actions 10Thanks 10

About the Service 11Mission Statement 11Constitution & Rules 11The Rules Committee 11Constitution and Rule Changes during 2002 11Service approval by ASIC 12Systemic Issues and Serious Misconduct 12

Complaints Handling 14Conciliation Meetings 14Review of Procedures 14Jurisdiction 15Complaints Process 15

Telephone Enquiry Service 16

Written Complaints 18

Life Insurance 19

Financial Planning 24

Stockbroking 29

Managed Investments 33

Education 37Forums, Conferences and Seminars 37

Administration 38Membership 38Staff 38

Organisation Chart 31 December 2002 39

Member Companies 40

FICS ANNUAL REVIEW 2002 PAGE 1

Contents

Case Study 1 – Stockbroking 8

Case Study 2 – Life Insurance 20



Case Study 5 – Financial Planning 25





Case Study 10 – Managed Investments 33

Case Study 11 – Managed Investments 34

The year 2002 saw the continued expansion of the Financial Industry ComplaintsService (FICS) role in the Australian community. Today FICS provides an ever-increasing coverage of financial products, dealing with a broad range of enquiriesand disputes between Members and their customers.

The role performed by FICS is indeed wide in application, offering consumers offinancial products a free alternative dispute resolution facility, while they retain theright to pursue their disputes against the Member in other forums such as the courtsin the event that they are dissatisfied with the Service’s independent determinationof their dispute. The determination is however binding on the Member.

During the year FICS was independently reviewed. The outcome of the Review hasbeen the development of an Implementation Plan to improve the dispute resolutionservice to consumers and Members. The independent triennial Review is welcomedby the Board and ensures FICS remains relevant and continues to meet highstandards and professionalism in its dealings with consumers and Members.

In 2002 the Board was also provided with a number of significant challenges which are addressed inthis Annual Review. I would, however, like to thank my fellow Board members for their commitment andsupport. The members of the Board Committees have done an extraordinary amount of work and hereI refer to the Finance Committee and the ad hoc Committees: Communications, Review, Selection andthe Rules Committees. In the absence of these Committees, the Board would have great difficulty inmeeting the many demands faced by it during the year.

The Board of Directors has been reduced from nine to seven members, consisting of three IndustryRepresentatives and three Consumer Representatives, with myself as the independent Chair. Departingthe Board this year were Lynn Ralph, Tony Devlin, Tony Issa and Daryl Hawkey. I would like to thankthem for their effort and dedication during their time on the Board. The Board welcomed new membersDavid Squire (Industry) and Justin Malbon (Consumer).

Additionally, I would like to thank the Panel and Adjudicator for the work undertaken by them duringthe year, in particular The Hon. Norman O’Bryan for his untiring work and commitment to the Serviceuntil his retirement in May 2002. I would like to express my sincere thanks to Ian Thompson for assistinguntil the appointment of Dick Viney as Panel Chair in July 2002. Mr Thompson will continue to assistwith the Panel workload for the remainder of the year.

On 31 January 2003, the Board appointed Ron Eggleston and Murray Gerkens as Panel Chairs toassist Mr Viney. I look forward to them furthering the high quality of the work of the Panel.

Finally, I would like to thank the staff of the Service and the Chief Executive Alison Maynard for theircontribution to the Service. FICS staff are dedicated professionals whose work is of great benefit to thecommunity and the industry.

Peter E. DalyChair of the Board


Report from the Chair of the Board of Directors

FICS has a seven member Board comprising three consumer directors, three industry directorsand an independent Chair. Industry directors are appointed by the relevant industryassociations; consumer directors are appointed by the Board in consultation with relevantconsumer organisations, and the Chair is appointed by the industry associations in consultationwith consumer directors. The Constitution sets out criteria for ensuring the Chair’s independence.

DirectorsThe directors of the Company are:

Peter E. Daly (Chair)

Appointed a director of the Company and the Chair in January 1997. He came to Australia in1980 from South Africa and was appointed the Chief Executive and Managing Director ofNorwich Winterthur Group in 1983. He held a number of directorships since then, was thePresident of the Insurance Council of Australia 1986 - 1987 and Chief Executive Officer from1991 - 1997. He was the Deputy Chairman of the Zoological Parks and Gardens Board andis also the Chair of Insurance Enquiries and Complaints Limited.

David W. Lidbetter, B.Sc., Dip.Scc Inst.

Appointed a director of the Company on 10 November 1999 as a consumer representative. In1975 he was appointed managing director for Berger Paints Australia, a position he held until1980 when he was appointed Supervising Director and Chief Executive of the parent groupBerger Jenson & Nicholson responsible for operating companies worldwide. In 1986 he retiredto focus more time on private interests. He has played a part in community work and in 1986was appointed as Community Representative on the Sydney Airport Community Forum andvarious airport Committees.

Heather Loewenthal, BSc(Psych)Hons/LLB; FAICD

Appointed a director of the Company in November 1999 Heather has extensive experience inthe financial services and banking industry. She is currently General Counsel for ING. In 1998and 1999 she was a board committee member of the Regulatory Affairs Committee of the IFSABoard. She is currently vice president of the Australia Compliance Institute (ACI) formerly theAssociation for Compliance Professionals of Australia (ACPA) being president in 2001 and2002.

Jenni Mack, BA, MALP

Appointed a director of the Company on 10 November 1999 as a consumer representative.Jenni has extensive consumer affairs and complaints handling experience. She is a formerexecutive director of the Consumers’ Federation of Australia, the peak consumer body. She wasalso the deputy legal services Commissioner in NSW responsible for handling complaints aboutlawyers. She currently represents the community on the NSW Judicial Commission (whichamongst other things deals with complaints about judicial officers), the Migration Agents’Registration Authority’s complaints panel and a director of Insurance Brokers Disputes.


About the Board

Peter E. Daly(Chair)

David W. Lidbetter

HeatherLoewenthal

Jenni Mack

Dr Justin E. Malbon, LLB(Adel) LLM (York, Can) PhD (UNSW) Barrister

Appointed a director of the Company on 20 November 2002 as a consumer representative. Heis a Senior Lecturer at the Law School, Griffith University. Prior to that he was an AssistantParliamentary Counsel with the Queensland Office of Parliamentary Counsel and a solicitor atthe Melbourne office of Blake Dawson Waldron. He has been actively involved in the consumermovement for many years, holding positions as president of the Queensland Consumers’Association and as a member of the board of the Australian Federation of ConsumerOrganisations.

Adj. Prof. Wes A. McMaster, CFP, FAICD

Appointed a director of the Company on 16 February 2000 representing industry participants.He is currently a director and the principal of McMaster Securities Pty Ltd, consultants to thefinancial services industry. He has managed his own financial planning practice, been chiefexecutive officer of two national financial planning firms and is a former chairman of the FinancialPlanning Association of Australia. He is also a director of GLS Business Rewards (Australia) PtyLtd. He holds the position of Adjunct Professor (Financial Planning) at RMIT University.

David W. Squire, Dip AII, GMQ (UNSW), QPIB

Appointed a director of the Company on 9 August 2002 representing industry participants.Currently the National Regulatory Policy Manager of the Wealth Management Division of theNational Australia Bank, he has over thirty-eight years experience in general banking, lifeinsurance and financial planning in a variety of roles. He has a record of industry advocacydating back to 1982 and is currently a director of the National Insurance Brokers Association,a member of the IFSA Regulatory Affairs board committee and the FPA Policy and GovernmentRelations Advisory Board Committee and National Councillor of the Australian ComplianceInstitute. Additionally he chairs a number of active committees at the aforementioned bodies andis a member of the Treasury’s FSRA Implementation Consultative Committee.

Alternate DirectorsIngrid Gubbay

Appointed by Jenni Mack as her alternate on 9 August 2000 and is currently a solicitor in theConsumer Law Unit with the Legal Aid Commission (NSW).

Adrian Holst, BSc, BCom, FCPA, FSIA

Appointed by Wes McMaster as his alternate on 8 March 2000. He is currently a stockbrokerwith FW Holst & Co Pty Ltd.


About the Board

Dr Justin E. Malbon

Adj. Prof. Wes A. McMaster

David W. Squire

Responsibilities of the Board

The Board is responsible for:

● Overseeing and monitoring the activity of the Service and ensuring the independence of thedispute resolution process;

● Appointing all members of the Panels and the Adjudicators;

● Ensuring the Panels and Adjudicators adhere to the Service’s rules (but not to the extent ofoverturning a decision made by either body);

● Analysing statistical information;

● Analysing and commenting on the Annual Review;

● Satisfying itself that promotional programs are properly funded;

● Effecting appropriate changes to the Rules after consultation;

● Ensuring the Service meets all government benchmarks, polices and guidelines and maintainsits approved status;

● Identifying recurrent or ongoing industry problems and reporting serious misconduct to theregulators.

Meetings

The Board met six times in 2002 in February, April, May, July, September and November. Threemeetings were in Sydney and three in Melbourne.

Major initiatives

● Commissioning and overseeing a comprehensive review of the Service;

● Appointing Dick Viney as Panel Chair following the retirement of The Hon. Norman O’Bryan;

● Major review of corporate governance practices;

● Reduction in size of Board from nine to seven directors whilst maintaining parity betweenconsumer and industry directors;

● Preparation of 2003 corporate plan;

● Implementation of new Rule 12 which expands monetary limits on monthly claims andprovides greater certainty for insurers.


About the Board

Committees

Finance Committee (standing committee)

Chair: David Lidbetter

Members: Wes McMaster, Alison Maynard (Chief Executive),Brian de Kock (Company Secretary).

Meetings: Six times a year prior to each Board meeting.

Function: Monitor accounts, review annual accounts, meet with auditors.

Communications Committee (ad hoc)

Chair: Tony Devlin

Members: Jenni Mack, Heather Loewenthal and Alison Maynard.

Meetings: One

Function: Monitored implementation of communications strategy arising out of previous year’sresearch.

The committee was disbanded in November. The Service is now committed to employing anexternal relations manager.

Review Committee (ad hoc)

Chair: Peter Daly

Members: Jenni Mack, Heather Loewenthal and Alison Maynard.

Meetings: Six

Function: To conduct the tender process and select tenderer, supervise review process, prepareBoard’s response to the final report, oversee the implementation plan.

Panel Chair Selection Committee (ad hoc)

Chair: Peter Daly

Members: Jenni Mack, David Squire and Alison Maynard.

Meetings: Four

Consumer Panel Members Selection Committee (ad hoc)

Chair: Alison Maynard

Members: Jenni Mack, Daryl Hawkey.

Meetings: One

Functions: To oversee selection process and recommend candidates to the Board for appointment.

Rules Committee (appointed by FICS Management)

Chair: Alison Maynard

Members: Jenni Mack, industry association representatives David Mico (IFSA), Brook Sweeney(IFSA), June Smith (FPA) and Doug Clark (SDIA). Consumer representative, John Berrill.

Meetings: Three

Function: This committee provides the major consultative vehicle for the Board when consideringRules changes. In practice proposed Rules changes are signed off by this committeebefore being considered by the Board.


About the Board

The year 2002 saw a slight decrease in the number of life insurance complaints referred tothe Panel for determination but a substantial increase in the number of investment advice andsecurities industry complaints referred. The Panel determined 91 life insurance complaintscompared with 114 complaints in 2001 while 74 non-life complaints were determinedcompared with 34 in 2001.

The total number of complaints determined by the Panel in 2002 was 165, an increase ofover 10% on the total for 2001.

Objections to JurisdictionThe Panel continues to have concerns about objections, taken in good faith by Members, tothe jurisdiction of the Service to conciliate and arbitrate complaints. Many are issues ofinterpretation of provisions of Rules 12, 14 and 15. The real answer probably lies in someredrafting of parts of those rules to eliminate ambiguities and uncertainties.

However, it is clear that special difficulty arises in cases where the amount in dispute wasapparently within the relevant monetary limit when the complaint was received but before thecomplaint could be resolved the losses grew to a figure over the limit. There are a numberof possible solutions to this problem and it is anticipated that the Rules Committee will alsoreview this matter in the near future.

Life InsuranceThe Panel continues to receive complaints concerned with medical matters, where it decides that a benefit that wasterminated some two years or more before should not have been terminated. When this occurs there is very oftenno recent medical evidence of the claimant’s condition and it is difficult to assess for how long benefit should be paid.This problem was discussed in some length in the Report for 2001 by the then Panel Chair, Norman O’Bryan.

The problem has, if anything, worsened. It is common for the Panel to receive robust submissions from Membersdrawing attention to the lack of reasonable medical evidence and arguing forcefully that it would be inappropriatefor the Panel to make any order for the restoration of benefits until such time as more medical evidence has beengathered. This appears to raise serious questions of equity in those cases where the Member’s reasons forterminating the benefits are inadequate; particularly when one has regard to the fact that it was the termination ofthe benefits which inevitably led to the situation that no recent medical evidence is available, simply because theMember was no longer requiring monthly or quarterly progress medical reports.

The Panel notes and agrees with the observations of the previous Panel Chair in the 2001 Report that often, as amatter of fairness, a rather arbitrary decision has to be made. The Panel believes that there should be mutualbenefits derived from consultations between the Service, Members, industry associations and consumerrepresentatives aimed at minimising the extent of this problem.

Other ComplaintsThe task of the Panel continues to grow as the number, complexity and range of complaints rises. It was alsorequired to determine a number of controversial cases, one of which involved convening a hearing at whichrepresentatives of the Australian Stock Exchange were invited to attend and address the Panel. The Panel does notexpect there to be any reversal of the growth trend in investment complainants while securities markets remainvolatile and the returns achieved by many managed funds are significantly lower than investor expectations.


Report from the Chair of the Panel

ThanksThe Panel wishes to endorse the Chair of the Board’s expression of appreciation for the major contribution madeby Norman O’Bryan who retired after 6 years as Panel Chair.

The Panel also wishes to acknowledge the tremendous contribution over 10 years made by Iain Ross as the full-time Panel Member representing life insurers. Iain retired in November 2002 but has agreed to serve on as analternate life industry member. Iain’s replacement as full-time industry member is Graham Slater.

I also wish to thank all Panel Members and the management and staff of the Service for their efforts.

Richard Viney, Chair of the Panel


Report from the Chair of the Panel

Case Study 1Stockbroking

On 6 June 2001 the complainant placed an order with the Member online at 9.19am to buy LLCIDAwarrants. The order was amended several times, the last order before execution at 10.05am was to buy20,000 LLCIDA warrants at 10 to 12 cents. The order was executed at 10.17am. The complainant wasadvised by email that it had bought for him 20,000 LLCIDA at an average price of 12 cents for aconsideration of $2,400 plus stamp duty and brokerage. Total cost $2,432.60.

The complainant received a Buy contract note dated 6 June 2001, which on the back stated it was subjectto the business rules, customs and usages of the Australian Stock Exchange (ASX), and was also subject tothe correction of errors or omissions.

On 6 June trading in LLCIDA warrants was suspended by the ASX in simple terms because there had beenan unfair and disorderly market. Brokers were requested to contact their counterpart brokers and cancel thetrades. All 17 trades were cancelled by agreement between the relevant brokers.

The complainant declined to agree to the cancellation of his contract, however the Member cancelled thecontract and the complainant referred the matter to FICS.

The Member believed it was required to comply with the ASX request to cancel the trades pursuant to ASXBusiness Rule 2.17, and that it was not legally obligated to obtain the complainant’s consent prior to agreeingto cancel a transaction.

The Panel said that there were three contracts made in the sale and purchase of the warrants. The vendor ofthe warrants had a contract with his broker. The complainant had a contract with the Member. There wasalso a contract between the Member and the vendor’s broker. It was only this contract that the ASX requestedbe cancelled.

A letter from the ASX in relation to this complaint stated “It is a matter between brokers and their clients howthey deal with a situation involving a cancelled trade”.

The Panel formed a view that the Member was legally obligated as a matter of contract law to obtain theconsent of its client, the complainant, before it could safely cancel the trade as requested by ASX. If itcancelled without consent the complainant could claim damages for breach of contract.

The Member did not obtain consent so it had breached the contract. The complaint was upheld and theMember ordered to pay the amount of approximately $83,000.

Independent ReviewAs a condition of approval by the Australian Securities and Investments Commission (ASIC),the Service is required by ASIC Policy Statement 139 to commission an independent reviewof its operations and procedures every three years.

During 2002 the Service was independently reviewed by Tania Sourdin of La TrobeUniversity and Jane Elix of Community Solutions. The review took up considerable time andresources involving Board members and Senior Management of the Service. Particularthanks must go to the Board members on the Review Committee, Peter Daly (Chair), JenniMack and Heather Loewenthal for their significant contributions during the review.

Copies of the Issues Paper and Final Report of the Reviewers are available on the FICSwebsite, as is the Service’s implementation plan for the review recommendations.

As a consequence of the review the Service will be implementing major changes to itshandling of complaints. In particular, the Service will be significantly reducing the use ofletters of advice from Case Managers as a method of dealing with complaints, andincreasing the emphasis on conciliation by Case Managers and determination by the Paneland Adjudicator.

ComplaintsThe Service dealt with 11,000 telephone enquiries and complaints and received 973 written complaints in 2002,compared with 988 received in 2001. The Service received 520 new life insurance complaints compared with588 in 2001. Financial planning complaints increased from 186 in 2001 to 257 in 2002. The number ofcomplaints about stockbrokers stayed about the same at 135 in 2002, compared with 134 in 2001. Managedinvestment complaints dropped from 80 in 2001 to 61 in 2002. Further information about complaints is containedin the complaints handling section of this report.

The PanelThe Panel finalised a total of 165 complaints, compared to 149 in 2001. The Adjudicator determined 32complaints, compared to 27 in 2002.

The Service welcomed the new Panel Chair, Dick Viney, also financial planning representatives John Hewison, MaxWeston and Peter Dunn. Ron Eggleston and Murray Gerkens were appointed as Panel Chairs on 31 January 2003to assist with the Panel workload.

CooperationThe Service has been pleased with the results of the Call Centre operated jointly with the Australian BankingIndustry Ombudsman (ABIO), Insurance Enquiries and Complaints (IEC) and the Credit Union Dispute ResolutionCentre (CUDRC). The call centre was launched by the Federal Treasurer The Hon. Peter Costello, MP on 21 June2002. Consumers can contact all four services on 1300 78 08 08. FICS already shares a company secretary,accounting area and IT system with IEC, and is adopting a case management system based on that used by ABIO.The four schemes are examining other ways in which cooperation can be achieved.


Chief Executive’s Report

LiaisonLiaison meetings for Members were held in Sydney, Adelaide, Perth and Melbourne during 2002. The Melbourne,Sydney and Perth meetings were very well attended. A major focus of the meetings was the independent reviewof FICS. The Service’s operations were discussed, and in particular the Service’s expectations of Members. Themeetings are an opportunity for the Service to interact with and receive feedback from the Members.

The Service also provides monthly reports to the Australian Stock Exchange (ASX) and the Financial PlanningAssociation (FPA). Regular meetings are also held with them.

Constitution and RulesThe Constitution was amended at the Annual General Meeting in May 2002 to accommodate the new FinancialServices licensing regime and the possibility of new Members, in particular Friendly Societies, joining the Service.The Constitution was also amended to allow the Service to deal with complaints against former Members, providedthe complaints were received by the Service whilst the Member was a current Member. The Service sees this aspart of the solution for dealing with the problems caused to consumers when Members cease to be licensed andtherefore cease to be Members of FICS. The Rules were also similarly amended.

Other changes to the Rules were the adoption of an amended Rule 12 which provides for claims concerning incomestream risk policies to be made, up to $6,000, providing that is the stated policy limit and changes to theappointment process for consumer representatives, the Panel and Adjudicator.

Systemic Issues and Serious MisconductThe Service continued to monitor systemic issues and serious misconduct. However, to date, all issues have beenresolved by being brought to the Member’s attention and it has not been necessary to name any Members to ASIC.The Service continues to provide quarterly reports to ASIC containing statistical data and information aboutsystemic and other issues.

Legal ActionsIt is disappointing to note that the Service is now a defendant in two legal actions. One action had been broughtby a Member seeking to set aside a Panel determination. The other action has been brought by a complainantseeking personal injury damages, alleging these were caused by a Panel Determination considered incorrect bythe complainant. The legal actions are both in the very early stages.

ThanksI would like to thank the FICS Board members and in particular the Chair of the Board, Peter Daly for their supportand contributions during 2002. I would also like to thank The Hon. Norman O’Bryan, Ian Thompson and DickViney, for their work as Panel Chairs during 2002. I would also like to thank the other Panel Members and thestaff of the Service, without whose efforts nothing would be possible.

Alison Maynard, Chief Executive


Chief Executive’s Report

The Financial Industry Complaints Service Limited came into being on 26th October 1999, however, theunderlying scheme has been in operation since 1991 and was formerly the Life Insurance Complaints Service(LICS). The Service resolves complaints relating to members of the financial services industry including lifeinsurance, superannuation, managed investments, stockbroking, financial advice, investment advice and sales offinancial investment products. The Service currently deals with personal superannuation products sold by lifeinsurance companies. Other superannuation disputes are dealt with by the Superannuation Complaints Tribunal.

Mission StatementThe mission statement of the Service is “to encourage and assist consumers and Membersto reconcile any differences by way of an effective alternative dispute resolution servicein accordance with the Rules in such a manner as to retain a working relationshipbetween the parties”.


About the Service

Constitution and RulesThe Service is governed by a Constitution and Rules. TheConstitution sets out the objectives of the company and governsthe operations of the company. The Rules, on the other hand,provide the detail on how the Service will deal with complaints.The Constitution of the company may only be changed at aGeneral Meeting however the Rules of the Service may bechanged by the Board.

The Rules CommitteeThe Rules Committee was formed in early 2000 to be aconsultative body representing the stakeholders of the Service.It has the ability to make recommendations to the Board inrelation to the Rules of the Service. The Board has adopted apractice of referring Rules changes to the Rules Committee forconsideration prior to making changes. The current members ofthe Rules Committee are David Mico, IFSA, Brook Sweeney,IFSA, June Smith, FPA, Doug Clark, Securities & DerivativesIndustry Association, John Berrill, Senior Partner, MauriceBlackburn Cashman Lawyers and Jenni Mack who is also aBoard member. Andrew Wong and Ingrid Gubbay departedthe Committee during the year. The Constitution of thecommittee fulfils the Service’s obligation to consult widely withthe Service’s stakeholders, including different industry andconsumer groups in relation to changes to the Rules.

Constitution and Rule Changes during 2002A number of significant amendments were made to the Rulesduring 2002.

The Rules dealing with the involvement of the Federal Ministerresponsible for Consumer Affairs in certain FICS processes wereamended early in the year, as outlined in the 2001 AnnualReview. These were Rules 42, 43, 45, 46 and 48 dealing withthe appointment of Panel members and Adjudicators, and Rule60, dealing with amendments to the Rules. The Minister is nolonger involved in these, or any other FICS processes, and theMinister’s former role is now undertaken by the FICS Board.

Numerous amendments were made to the Constitution and Ruleswith effect from July 2002, including a renumbering from Rule26 onwards. The changes made include the following:

■ The Constitution and Rules were amended to allow theBoard to reduce its numbers, whilst maintaining a balancebetween Directors representing the interests of Members andthose representing the interests of consumers. Subsequently,the Board exercised these powers by reducing its numbersfrom nine to seven.

■ The terms of Panel members and Adjudicators wereincreased from two years to three years. (Appointeescontinue to be eligible for reappointment).

■ The Rules were amended to broaden consultation in relationto Panel and Adjudicator appointments and Rulesamendments. In particular, Industry Associations (as definedin the Constitution and Rules) and relevant consumer groupsmust be consulted in relation to the appointment of

Adjudicators and Panel Chairs and in relation to Rulesamendments. Input is also obtained from IndustryAssociations when appointing Panel industry representativesand from relevant consumer groups in relation to Panelconsumer representatives.

■ The Constitution and Rule 15 were amended to enable FICSto continue to deal with complaints against a Member whoceased to be a Member after the complaint was received byFICS. The requirement was that the complaint must be aboutan entity which is a Member of FICS at the time thecomplaint is made to FICS.

■ The requirement to circulate all Panel determinations waschanged in line with changes in technology to insteadrequire publication of all Panel and Adjudicator decisions onthe FICS web site (www.fics.asn.au).

Rules 12 and 13, which deal with monetary limits on complaintsto FICS, were amended with effect from October 2002. Themonetary limit for complaints relating to income stream riskinsurance was increased to $6,000 per month and is to bedetermined in accordance with the stated policy limit, rather thana claim value limit. Rule 13 now provides that the monetarylimits apply to all complaints unless the parties agree otherwisein writing. Disagreement as to whether a complaint is within themonetary limits is to be referred to the Panel for decision.

The Rules of the Service are available on the FICS website.

Service approval by ASICFICS was approved by ASIC in October 1999 pursuant to ASICPolicy Statement 139 which provides the guidelines by whichASIC will assess the Service for approval.

The guidelines address the areas of accessibility, independence,fairness, accountability, efficiency and effectiveness. ASIC mustalso be consulted when any changes to the Service’sConstitution or Rules are being considered.

Systemic Issues and Serious MisconductFICS has a responsibility to identify systemic issues and cases ofserious misconduct that arise from complaints, refer thesematters to the relevant Member(s) for response and action andreport information about the systemic issue or seriousmisconduct to ASIC in accordance with agreed guidelines andthresholds.

A systemic issue is one that may have further implications for aMember beyond the immediate actions and rights of the partiesto the complaint. Whilst several complaints of the same type mayindicate a systemic issue, it is not enough to define or classify asystemic issue by reference only to the number of complaints theService may receive. A systemic issue can be identified by onecomplaint; this is because the effect of the particular issue willclearly extend beyond the parties to the complaint.

Rule 63 provides that, “the Board must ensure that FICS hasprocedures in place for dealing with systemic issues and seriousmisconduct”. FICS has published its procedures for dealing withsystemic issues and serious misconduct in Bulletin No. 5,October 2001.

During 2002 nine referrals were made under FICS procedures.Seven of these were resolved by the Members providingadditional explanations and/or advising of satisfactory stepsthat had been taken to address the concerns raised.Accordingly, those matters did not result in the Members beingreferred to ASIC and FICS informed ASIC of those systemicissues without identifying the Members concerned. Theremaining two referrals were outstanding at the end of the year.

Some systemic issues dealt with during 2002 were:

Notification of Reduced Life Policies

This complaint stemmed from the fact that when the Member tookover the business of a previous company the Member’s annualpolicy statement system was unable to show the reduced amountsof the previous company’s life policies. This resulted in renewaloffers being issued showing the originally proposed sum insuredand clients were not reminded that the cover was decreasing.

A Rule 63 referral resulted in the Member acknowledging theproblem and rectifying it in the following ways:

■ All affected policyholders were identified (there were 244 intotal);

■ The Member’s records were altered to reflect the correct suminsured;

■ Letters were sent to the affected policyholders offering theman apology and advising them of the current and correctsum insured;

■ Contact telephone numbers were provided for policyholderswho may have had questions or concerns about the actiontaken;

■ A system has been implemented to ensure that future annualstatements record the correct reduced sum insured.


About the Service

Poor Complaint Handling Procedures

Two referrals stemmed from expressions of concern by the Panelin separate Determinations involving different Members aboutthe unsatisfactory way in which each Member had handled thecomplaint. Both Members had the same compliance officer/contact person.

In one matter the complainant gave three bank cheques, for$3000, $3000 and $7000 to the authorised representative ofthe Member for investment in two funds. The complainant statedthat he never received any information that the money had beeninvested. He eventually ascertained that the cheques had neverbeen presented and so he stopped them. He soughtcompensation from the Member for the monetary loss sufferedas a result of the monies not being invested.

The Member was extremely slow in responding to the CaseManager’s requests for information and never provided astatement of the facts relating to the non-investment of themonies. When the Member was informed that the complaintwas to be dealt with by the Panel no response was received.

In the other matter, the complainants sought financial planningadvice from the Member in relation to an investment of$170,000 in March 2000. The authorised representativeprepared a discussion paper for the complainants which said,“Note: This is not a financial plan. This document is adiscussion paper and is designed to assess financialalternatives. This gives you the opportunity to alter theinvestment strategy if required. A detailed financial plan will beprepared at a later date”. This paper was dated 22 March2000.

On 10 July 2000 the complainants gave $170,000 to theauthorised representative as an undeducted contribution to bethen rolled over to an allocated pension. On 11 September2000 the complainants received confirmation of the allocatedpension. They requested a copy of their financial plan. TheMember provided a duplicate copy of the original plan dated10 August 2000 and it was ascertained that this date was false.

The complainants lost faith in the investment and wished tochange, however they found that the plan document indicatedfees that were not made known to them until June 2001 andwhich contradicted the authorised representative’s represent-ations in March 2000 that there were no entry or exit fees.

The Member ignored the complaints and also repeated requestsfrom FICS to respond.

Both Members acknowledged that the respective complaints hadbeen handled unsatisfactorily and, following discussions withFICS, advised of details of new complaints handling procedures,

new computerised database systems and changes to officers’responsibilities.

In relation to the first matter, an explanation regarding thefailure to invest was provided and satisfactorily addressed FICSconcerns. However, as that explanation had not been providedprior to the Panel Determination (because of the Member’sfailure to respond to requests for information) it was not takeninto account by the Panel.

Delay in providing information to complainant

A complaint was brought by the trustee of a deceased estate.The substance of the complaint related to the amount of thecommutation payment of a fixed term annuity that was paid tothe estate.

Although the complainant was ultimately unsuccessful, the Panelcommented that it “feels obliged to express its concern at theMember’s inordinate delay in responding to a proper andsimple request for information”. This comment was made inrelation to a delay of over five months by the Member inresponding to queries raised by the trustee about the amountpaid out.

The Member provided FICS with explanations for the delay and,more importantly, advised of measures that had been taken toprevent similar delays in the future. Those measures included aworkflow tracking system involving weekly reports, theestablishment of a new complaint management team, resultingin “tighter and streamlined complaint handling practices” andthe use of imaging technology to assist in the administration,tracking and retention of cases.


About the Service

The Service is a national service which is free to consumers. However, Members must pay an annual levy andcomplaint fees. The Service operates through a process of investigation, negotiation, conciliation and arbitration.Investigation, negotiation and conciliation of written complaints are carried out by the individual Case Managersand the majority of cases are resolved by this method. If a complaint cannot be resolved by the Case Managerit will be referred to the Panel which is made up of an independent chair, an industry representative and aconsumer representative. If the complaint is not complex and is less than $10,000 it will be referred to theAdjudicator.

The procedure in 2002 involved the parties being invited to make submissions to the Panel or Adjudicator. TheLiaison and Technical Support Manager assisted the complainants to prepare their submissions upon request. Innearly all cases consideration of the complaint occurs on the written information provided by the parties but, ifthe Panel or Adjudicator requires, the parties may appear either in person or by way of a telephone or videoconference. The Panel and Adjudicator are not investigators nor are they advocates for either party. Thedetermination made by the Panel or Adjudicator is binding on the Member but not on the complainant who mayseek legal or other remedies that may be available to them.


Complaints Handling

Conciliation MeetingsFICS arranged conciliation meetings in seven of the cases in2002. Three of those matters were resolved at each meeting.

The first successful conciliation meeting involved a financialplanner. The complainant had commenced an annuity. Heclaimed he had not been told that part of his capital would beused to make the annuity payments if the investment did not earnsufficient interest. The mediation resolved with the Memberagreeing to pay a percentage of the complainant’s loss after thecomplainant conceded he was responsible for part of the loss bynot being more diligent in relation to examining the paperwork.

The second successful conciliation meeting included a pre-mediation meeting with both parties separately. The complaintconcerned long standing customers of the Member (with over$1m invested) who were in a successful small business. Theywere strongly encouraged by the Member to take their funds outof a fixed interest investment into a more “balanced” investment.The investor’s risk was rated as conservative, however, theywere not placed in such an investment. The Member relied onthe documents which indicated all risks were detailed. Themediation took some five hours and a settlement was reachedafter the Member apologised to the complainants, primarily fornot listening to them when they first raised the complaint. Afigure of settlement was agreed to, which equated to a refundof some $60,000 lost in the investment. Again the complainantaccepted some responsibility. The funds remained with theMember in a term deposit and both parties have maintained astrong relationship. The complainant and the Member werealso able to reach agreement on a similar complaint involvingtheir superannuation investment.

The third successful conciliation meeting involved an “ethicalinvestment” company. A young investor who had inheritedsome funds contacted the company. They made arecommendation based on his risk. He accepted part andamended part. The investment decreased. Both parties werekeen to mediate and resolve the case. The Member agreed tomeet some of the loss as it felt partially responsible. It also hadfelt sorry for the complainant as he was very embarrassed hehad lost part of his inheritance. The Member was also veryconcerned about their image and brand name. Both partiesagreed not to maintain their relationship.

Review of ProceduresThe Service’s complaints handling procedures are currentlyunder review following the Independent Review and theappointment of the new Panel Chair. It is anticipated that therewill be changes in the following areas:

■ Increased use of conciliation meetings by Case Managers,particularly telephone;

■ Major reduction in the use of advisory letters;

■ Exchange of information received from the parties –documentary, video and audio material; and

■ The provision of submissions and summaries of the parties’cases to the Panel and Adjudicator.

JurisdictionThe Rules specify a number of limits on FICS jurisdiction tohandle complaints. These include the requirement that the entitycomplained about must be a Member of the Service at the timethe complaint is made and monetary limits on the amountclaimed. Complaints about the levels of fees and charges or theinvestment performance of a product cannot be dealt with bythe Service, except where the complaint concernsnon–disclosure or misrepresentation. The Service also cannothandle complaints relating to underwriting or actuarial factorsthat led to insurance being rejected or offered on non-standardterms. Another important limitation is that claims for punitive orconsequential damages cannot be handled by the Service.

FICS is required to initially determine whether or not acomplaint falls within the Rules. Ultimately, the decision inrelation to jurisdictional issues rests with the Panel Chair or thePanel.


Complaints Handling

Complaints Process1. Complainant contacts Enquiries Officer Resolved by Enquiries Officer

2. Advised to put complaint in writing to the Member Resolved by agreement

3. No resolution by Member or 45 days elapses; then

4. Completed complaint form sent to Case Manager for investigation/negotiation/conciliation Resolved by conciliation

5. Case reviewed and either referred to the Panel or the Adjudicator Referred for arbitration

6. Panel or Adjudicator (less than $10,000 and non-complex), makes a decision binding on Member but not complainant.

The Service offers an enquiry service in relation to life insurance, financial planning, stockbroking and managedinvestment issues.

In June 2002 FICS, ABIO, CUDRC and IEC launched a new joint call centre with the number 1300 78 08 08.A catalyst for the decision to combine the telephone answering facilities of these four related complaints services,in the face of growing numbers of contacts, was the desire to maintain “human” operators rather than usemachines.

Callers are directed by an operator in the call centre to a FICS Enquiries Officer. If the caller has a complaintand they have not referred the complaint to the Member’s internal complaint handling system, they will be advisedto do so and to return to the Service if not satisfied with the outcome of that process. All Members of the Serviceare required by Rule 7 to have an internal complaints handling system to the Australian Standard. Callers arealso advised that there is a 45 day time limit on the Member’s internal complaints system.


Telephone Enquiry Service

Telephone Enquiry Service Contacts

2001 2002No. % No. %

This table indicates the total number of telephone calls to theenquiry service. The total number of telephone calls increasedby 3%. Enquiries increased by 1% and complaints by 9%.

The number of telephone enquiries received is different from thenumber of telephone complaints received. It is only when atelephone call is about a specific complaint that it is recorded asa complaint. Typical enquiries which are not recorded ascomplaints include: calculation of benefits, refusal of insurance,mistakenly ringing FICS when the caller intended ringing theMember, questions about superannuation, such as whethersuperannuation money can be withdrawn, and concerns aboutthe conduct of finance companies, such as repossession, debtcollection, refusal of finance and requirements to take outmortgage insurance. Any complaints which are outside thejurisdiction of the Service are referred elsewhere and recordedas enquiries.

The major referral sources for telephone complaints wereMembers 43%, media (including telephone directories) 23%and professional bodies such as the FPA at 24%.

Enquiries 7,151 67 7,195 66

Complaints 3,481 33 3,784 34

TOTAL 10,632 100 10,979 100

Telephone Referral Statistics

Referral Source 2001 2002No. % No. %

Agent/Broker 105 3 124 3

ASIC/ACCC 11 < 1 36 1

Consumer Affairs Bureaux 15 1 10 <1

Community groups 6 <1 6 0

Friend (includes relatives) 37 1 43 1

IEC & ICA 185 5 156 4

Insurance Company 1,075 31 1,013 28

Media (Newspapers, Magazines, Television, Telephone directories) 996 29 849 23

Member company(non-insurance) 86 2 568 15

Members of Parliament 11 <1 15 <1

Ombudsman(Commonwealth/State) 23 1 16 <1

Professional bodies 912 26 902 24

Superannuation Complaints Tribunal 19 1 46 1

TOTAL 3,481 100 3,784 100

These telephone call statistics are recorded because they arecomplaints not just enquiries.

The major cause for a telephone complaint continues to bestandard of service, for example not responding to telephonemessages or correspondence, delay in assessment of a claim,rudeness, failure to supply documents upon request andrequiring a payment before information is supplied. This wasthe top category at 42%, with denial of claim the second mostcommon telephone complaint at 33%.

The main categories of product which were involved intelephone complaints were Income Protection Policies at 32%,Total and Permanent Disability at 16% and Term Insurance at13%. A typical financial planning dispute would becategorised under investment single premium, one of themanaged investments categories or shares.


Telephone Enquiry Service

Nature of Telephone Complaints

2001 2002No. % No. %

Denial of claim 1,006 29 1,256 33

Inappropriate advice 73 2 342 9

Misrepresentation 319 9 216 6

Non-Disclosure 84 2 58 2

Policy values/charges 185 5 87 2

Standard of company service 1,366 39 1,555 42

Share transaction – misunderstanding 67 2 29 1

Policy terms & conditions 381 11 241 6

TOTAL 3,481 100 3,784 100

Types of Products – Telephone Complaints

2001 2002No. % No. %

Allocated Pension 6 <1 2 <1

Deferred Annuity 3 <1 2 <1

Endowment 201 6 143 4

Immediate Annuity 15 <1 10 <1

Investment Annual Premium 381 11 429 12

Income Protection 1,073 31 1,188 32

Investment Single Premium 481 14 302 8

Master Trusts 3 <1 0 0

Managed Investments - Bond 2 <1 0 0

Managed Investments - Cash 15 <1 7 <1

Managed Investments - Shares 30 1 10 <1

Shares - Derivatives Warrants 69 2 399 11

Personal Superannuation 11 <1 0 0

Term/Temporary Insurance 421 12 506 13

Total & Permanent Disability 554 16 624 16

Trauma 50 2 38 1

Unit Trusts – Property 3 <1 0 0

Whole of Life 163 5 124 3

TOTAL 3,481 100 3,784 100

The total number of new written complaints received by theService during 2002 was 973. There were also 89 complaintsre-opened during the year. A re-opened complaint is acomplaint which a Case Manager believes has been finalised(usually because the complainant has failed to respond tocorrespondence), but the complainant contacts the Service to re-open the complaint.

The number of new written complaints dropped by 1.5% in2002. Caution needs to be exercised in comparing theFinancial Planning and Managed Investments statistics for 2001and 2002 owing to statistical coding difficulties that particularlyaffected the 2001 figures.


Written Complaints

Written Complaints

2001 2002

Active at start of period 403 530

Complaints re-opened 110 89

New complaints received 988 973

Complaints finalised 971 899

Active at end of period 530 693

Summary of New Written Complaints

Industry Sector 2001 2002No. % No. %

Life Insurance 588 60 520 53

Financial Planning 186 19 257 26

Stockbroking 134 13 135 15

Managed Investments 80 8 61 6

TOTAL 988 100 973 100

Geographic Distribution of New Complaints

2002No. %

Australian Capital Territory 12 1

New South Wales 351 36

Northern Territory 9 1

Queensland 172 18

South Australia 63 6

Tasmania 37 4

Victoria 254 26

Western Australia 75 8

TOTAL 973 100

There were 274 active complaints at the commencement of2002. During the year 520 new complaints were received and52 complaints re-opened, and 351 complaints were active atthe end of 2002.

There has been a trend since 1999 of a drop in the number ofinsurance complaints from 799 in 1999, to 618 in 2000, 588in 2001 and 520 in 2002.

This is the period in calendar days between the date acomplaint is first received and the date the investigation isfinalised or 31 December 2002, whichever is the earlier. It includes cases that have been lodged prior to 1 January 2002that have been finalised during the year or remain open.

Complaints often involved a number of different issues but onlythe nature of the main complaint was recorded. This yearservice was the top level of category of complaint at 36%,followed by denial of claim at 32%.


Life Insurance

Life Insurance

Status of Complaints 2001 2002






Complaints Service Investigation/Negotiation

Investigation Time 2001 2002No. % No. %

1 to 40 days 47 5 19 3

41 to 60 days 181 19 146 21

61 to 80 days 97 10 122 17

81 to 100 days 251 26 123 17

101 to 120 days 63 7 43 6

121 days & over 311 33 254 36

TOTAL 950 100 707 100

Nature of Complaints

2001 2002No. % No. %

Service 204 35 186 36

Denial of claim 223 38 165 32

Policy values/charges 43 7 40 8



Terms or conditions 64 11 39 7

TOTAL 588 100 520 100

Distribution of Complaints

2002No. %




Queensland 114 22


Tasmania 16 3

Victoria 131 25


TOTAL 520 100

The most complained about life insurance products wereInvestment at 34%, and Income Protection at 33%.

This is the period in calendar months between the date acomplaint is first referred to the Panel and a determination is made or 31 December 2002, whichever is the earlier. It includes cases that have been referred to the Panel prior to 1 January 2002 that have been finalised during the year orremain open.


Life Insurance

Case Study 2Life Insurance

A FICS Case Manager was contacted by a complainant whojointly owned a life insurance policy with her husband on hislife. The policy provided for a recovery cash sum of$616,500 in the event that the husband suffered a serioustrauma.

The policy was taken out in 1997 and provided a buy-backbenefit which allowed one-third of the buy-back benefit to berenewed 12 months after a serious trauma benefit was paidout. The terms of the policy stated that on the next twoanniversaries of the recovery cash benefit payment theMember would offer to increase the life and terminal illnesscover by a further third of the benefit paid.

However, the offer would not apply if a serious traumabenefit was paid in respect of terminal illness.

In August 1999 the Member was notified that the insured hadbeen diagnosed with cancer. A recovery cash benefit of$616,500 was paid in October 1999. The first buy-backopportunity was 9 September and this was taken up. Theanniversary dates for the remaining two buy-backs were 9 September 2001 and 2002.

On 7 September 2001 the Member received notificationfrom the insured’s agent advising that the insured wasterminally ill and wished to claim under that section of thepolicy. On 23 October the company paid $1,165,837 tosettle the claim and that included $205,500 added to thepolicy in September 2000.

The second buy-back anniversary was 9 September 2001and the insured got a letter dated 29 August 2001 offeringthe buy-back option. It was accepted and paid for on thesame day. However, the Member denied the benefit on thebasis that once a terminal illness is notified, no further buy-back options are available. It also said that given a claimwas made on 7 September 2001, diagnosis of terminalillness would have been made some time before that date.

The Member was subsequently asked to review its position onthe second option given that the policy wording referred topayment of a claim for terminal illness, not notification of theclaim. It was also asked to consider that the optionsappeared to be offered in arrears, and that the terminalillness benefit was paid during the third year which shouldinclude the second buy-back benefit.

The Member agreed and paid the complainant.

The dispute was finalised by the Case Manager in favour ofthe complainant.

Contract Type Underlying Complaints 2002

No. %

Whole of Life 14 3

Endowment 15 3

Investment Annual Premium 176 34

Investment Single Premium 35 7

Term 58 11

Income Protection 174 33

Total & Permanent Disability 40 7

Trauma 5 1

Allocated Pension 3 1

TOTAL 520 100

Panel Determination Time

2001 2002Time taken No. % No. %

Up to 4 months 47 26 34 19

4 to 6 months 76 41 86 47

7 to 10 months 52 28 48 26

Over 10 months 9 5 15 8

TOTAL 184 100 183 100

Complaint outcomes in life insurance were 65% in favour ofMembers for complaints finalised by Case Managers withsimilar percentages of 68% for those finalised by the Panel and65% for those finalised by the Adjudicator.


Life Insurance

Complaint Outcomes

2001 2002No. % No. %

Finalised by Case ManagerIn favour of complainant 189 38 113 35In favour of Member 308 62 209 65

Medical ConciliationsIn favour of complainant 1 100 0 0In favour of Member 0 0 0 0

AdjudicatorIn favour of complainant 5 56 6 35In favour of Member 4 44 11 65

Finalised by PanelIn favour of complainant 37 32 29 32In favour of Member 80 68 62 68

TOTAL FINALISEDIn favour of complainant 232 38 148 34In favour of Member 392 62 282 66

Complaint Outcomes (continued)

2001 2002No. No.

Complaints CancelledWithdrawn by complainant 28 32

Outside RulesUnderwriting decision 2 3Investment performance 10 8Member not involved 4 8Subject to legal proceedings 4 2Consent denied

by fund trustee 0 2Amount over $250,000 4 4

TOTAL FINALISED 676 489

Nature of Complaint by Policy Type 2002

Denial Values/ Misrepresent- Terms & Non-Policy Type of Claim Charges ation Conditions Service disclosure Total

Whole of Life 0 0 7 2 5 0 14

Endowment 0 9 2 0 4 0 15

Investment Annual Premium 0 21 28 33 78 16 176

Investment Single Premium 0 10 5 1 13 6 35

Term 27 0 3 1 23 4 58

Income Protection 116 0 15 0 43 0 174

Total & Permanent Disability 18 0 1 2 19 0 40

Trauma 4 0 1 0 0 0 5

Allocated Pension 0 0 2 0 1 0 3

TOTAL 165 40 64 39 186 26 520


Life Insurance

Types of Outcome achieved for complaints resolved in favour of the complainant 2002

Finalised byCase Manager Adjudicator Panel Total %

Contract cancelled from inception 11 1 3 15 10

Contract alteration 10 2 3 15 10

Charges waived/reduced 3 0 4 7 5

Claim paid 18 3 19 40 27

Resolved by agreement 71 0 0 71 48

TOTAL 113 6 29 148 100


Although the complainant was effectively diagnosed withthe early features of Parkinson’s disease in April 1992,three months before he applied to join a staff insurancescheme in July 1992, he was not made aware of thespecialist’s diagnosis, which was not confirmed until1993.

Some months after the complainant’s application wasaccepted, he was told of the diagnosis and submitted aclaim for total and permanent disability. The insurerdenied the claim on the basis that the complainant did notdisclose the investigations or the condition when applyingto join the scheme.

The Member maintained that if the complainant hadrevealed in his application for insurance that he had beentreated by a specialist surgeon for tremor in his arm, itwould have obtained detailed medical reports from thedoctors in question, which would have led the company torefuse insurance cover.

The Panel found that because the complainant presentedto the specialist with a history of tremor affecting his leftarm, especially when he was anxious, and had noticedthat his voice was also affected, he had some duty tomake a disclosure in the application for insurance.

His failure to do this, according to the Panel, wasdeliberate or reckless, thus entitling the Member to avoidthe contract under section 29 (2) of the InsuranceContracts Act 1984.

The Panel decision was in favour of the company.

Referral Source of Complaints 2002

Referral Source No. %

Agent/Broker 17 3

ASIC/ACCC 10 2

Friends (includes relatives) 9 2

Member Company 263 51

Media (Newspaper, Radio etc.) 17 3

Ombudsman (Commonwealth/State) 11 2

Professional bodies 112 22

Superannuation Complaints Tribunal 8 1

Consumer Affairs 11 2

Community groups 10 2

IEC/ICA 15 3

Members of Parliament 3 0

Telephone directories 34 7

TOTAL 520 100


Life Insurance


The Panel was asked to review a dispute between a Memberand a complainant where the Member discontinued benefitsclaimed made under an income protection policy. TheMember took this action based on its assessment that thecomplainant had recovered to a stage where she wascapable of carrying out the duties involved in the occupationnominated at the time she took out insurance.

In arriving at its decision to uphold the complaint, the Panelhad to consider whether the complainant was totally disabledwithin the terms of the policy after the Member stoppedpaying benefits and whether the Member was correct inlooking only at the stated occupation to determine whethershe was able to perform her duties.

To do this, the Panel said it had to consider modern labourmarket conditions and employment practices and came to theview that it is extremely likely that “a person whoseoccupation is not professional will undergo a significantchange over a period of 25 years”.

In addition, the Panel reviewed the terms of a court judgmentwhere the claimant sought damages resulting from theaccident that prompted her claim under the income protectionpolicy.

Background to the dispute shows that from May 1995 thepolicy provided the complainant with monthly indexedincome in the event that she became totally disabled in theterms of the policy. In 1995 the complainant was self-employed as a secretary/director of a business operatedfrom her home.

After she was injured in October 1997, the complainantmade a claim under the policy, which was accepted by theMember. In May 2000 she was examined by a doctornominated by the Member and in June 2000 was told themedical evidence showed she was capable of performing theduties of a company secretary and of a registered nurse.

The accident in October 1997 became the subject of adamages claim which went to court. Recorded in the courtjudgement was the fact that at the time of her accident thecomplainant was working as a permanent part-time nurse onnight duty - and had been doing so since April 1996 - as wellas carrying out her company director/secretary work. Thecourt estimated that 60% of her income came from nursing.

After considering all the circumstances the Panel decided itwas a fair and reasonable approach to apply thedisablement test to each of the occupations the complainanthad at the time of the accident.

The Member’s position was that it relied on the definition oftotal disablement. Essentially this stated that a person wasunable to perform at least one of the duties of occupationwhich is necessary to produce income; not engaged in anyoccupation; and under regular care and attendance of aregistered medical practitioner.

The Panel considered the Member’s argument that, as thecomplainant listed her occupation as secretary/director, thedisablement test should apply to that occupation and not toher ability to work as a nurse.

However, the Panel said that the policy did not contain anyprovision limiting or removing cover if a change in theinsured’s occupation occurs or even requiring notification ofsuch a change. Neither did it give guidance to what isintended where significant changes occur in an insured’semployment arrangements.

In upholding the complaint the Panel made provision forbenefits to be resumed, effective from the time they werediscontinued at the rate of 60% of the maximum benefitpayable, as long as she remains totally disabled in terms ofthe policy. The arrears benefit attracted 5% interest.

The Panel decision was in favour of the complainant.

Caution needs to be exercised in comparing the FinancialPlanning statistics for 2001 and 2002, owing to statisticalcoding difficulties that particularly affected the 2001 figures.

This is the period in calendar days between the date acomplaint is first received and the date the investigation isfinalised or 31 December 2002, whichever is the earlier.

Complaints often involved a number of different issues but onlythe nature of the main complaint was recorded. The mostcommon complaint against financial planners wasinappropriate advice at 37%, followed by standard of serviceat 34%.


Financial Planning

Financial Planning









1 to 40 days 24 10 57 15

41 to 60 days 47 19 54 14

61 to 80 days 23 9 46 12

81 to 100 days 71 29 119 31

101 to 120 days 34 14 42 11

121 days & over 46 19 65 17

TOTAL 245 100 383 100


2001 2002No. % No. %



Non-Disclosure 18 10 1 <1

Values/charges 11 6 2 <1

Standard of Member service 40 22 86 34


TOTAL 186 100 257 100

Distribution of Complaints

2002No. %




Queensland 38 15


Tasmania 21 8

Victoria 71 28


TOTAL 257 100


Financial Planning

Case Study 5Financial Planning

A married couple with $500,000 to invest saw anadvertisement about financial planning advice in their localbank. Arrangements were made for an authorisedrepresentative of the Member, which is a subsidiary of thebank, to discuss with them the possibility of investing theirmoney in managed funds, operated by the Member.

They met the financial adviser on 29 June 2001 but declinedthe offer of financial planning advice. Instead they took withthem a prospectus issued by the Member, detailing the rangeof managed funds offered by the Member. They studied thisand on 5 July 2001 informed the authorised representativethat they would purchase units in five of the managed fundsto the value of $500,000.

The couple signed the application forms, paid $20,000 inapplication money, which meant that $480,000 wasinvested on their behalf. Each of the funds the couple chosehad suggested minimum timeframes of six years and the onlyadvice sought of the financial planner was the answer to twoquestions: one related to the performance of the fund; theother was whether it was a good time to invest.

On 2 May 2002 the complainants redeemed all the units andthe total proceeds amounted to $470,382.39. Their claim toFICS amounted to $29,617.61 – the amount required torestore their investment to its original $500,000.

The basis of the claim centred on the answers to the twoquestions asked by the husband of the couple. The husbandsays that in answer to the first question the authorisedrepresentative told him that all was in order. Of the secondquestion, she said that it was a good time to invest.

The authorised representative had a different recollection. Toanswer the first question, the adviser told the couple that thefunds had performed well but that the more volatile fundscould go up or down and that past performance figures couldnot be relied on as an indication of future performance.

The adviser did not answer the second question directly,instead telling the couple that the question which they neededto consider was not the time for going into the market but thetime they intended to be in the market.

The Panel considered the answer to be a somewhat“ingenuous way of replying to the question asked andessentially begged the question”.

The Panel heeded the Member’s submission that the husbandand wife were expressly told that they might be risking theirmoney by investing in inappropriate funds but consideredthat aspect to be irrelevant to the complaint: the answers tothe two questions.

The Panel obtained details of unit prices over the year 30June 2000 to 29 June 2001 and found that prices fluctuatedslightly at various times but they decreased slightly early inJune 2001 but had risen late in the month so that by 29 June2001 they were at their highest level over the precedingyear. On this basis the Panel found that the authorisedrepresentative had not misrepresented the situation.

On the second question, the complainants and the authorisedrepresentative were at odds. However the Panel found thatthe answer alleged by the husband to have been given wasessentially a statement of opinion, not, in the Panel’s view, astatement of fact. For a statement to be a misrepresentation itmust be a statement of fact. Further, the Panel said that if theauthorised representative did not hold the opinion which sheexpressed, her stating it was a misrepresentation that sheheld it; but there is no evidence of that. Unit prices had risento their highest level in 12 months; she could reasonably haveheld the opinion which she allegedly expressed.

The complaint was not upheld.

The most complained about products were investments of onelump sum at 43%, followed by investments with an annualcontribution at 25% and Personal Superannuation at 18%.

This is the period in calendar months between the date acomplaint is first referred to the Panel and a Determination is made or 31 December 2002, whichever is the earlier. It includes cases that have been referred to the Panel prior to 1 January 2002 that have been finalised during the year orremain open.

Financial Planning

Nature of Complaint by Contract Type 2002

Policy TypeAllocated Investment Investment Single Personal Unit Trusts

Nature of Complaint Pension Annual Premium Lump Sum Superannuation Property Total

Inappropriate advice 17 25 38 13 0 93

Misrepresentation 5 24 36 4 6 75

Non-Disclosure 1 0 0 0 0 1

Values/charges 0 2 0 0 0 2

Standard of company service 7 12 37 29 1 86

TOTAL 30 63 111 46 7 257


Complaints by Contract Type No. %

Allocated Pension 30 12


Investment Single Lump Sum 111 43

Personal Superannuation 46 18

Unit Trusts Property 7 2

TOTAL 257 100


2001 2002

Time taken No. % No. %

Up to 4 months 12 40 15 14

4 to 6 months 13 43 50 48

7 to 10 months 4 13 38 37


TOTAL 30 100 104 100

Complaint Outcomes

2001 2002No. % No. %

Complaint Outcomes (continued)

2001 2002No. No.


Outside RulesInvestment performance 0 3Member not involved 8 0Amount over $10,000 4 2







Outcomes at Case Manager level were 59% in favour ofMembers. Panel decisions were 51% in favour of Memberswhile 60% of Adjudicator decisions were in favour of theMember.


Financial Planning







TOTAL 57 4 21 82 100

The complainants were a husband and wife both aged 38with three dependent children. The husband was an owner/driver in the transport industry and the wife worked as a farmhand in a poultry farm.

The complainants attended a seminar conducted by theMember and later met with a representative of the Member.

A fact finder showed that the complainants owned a houseworth $250,000 with a $27,000 mortgage, a truck worth$150,000 for which there was a $90,000 loan. Thehusband also had $10,000 invested in shares. The husbandearned about $76,000 and the wife $12,000 for the taxyear ending 30 June 1998. The complainants wished tominimise the tax, put emphasis on investment property,provide superannuation and plan their investments.

The financial plan provided estimated increases in thehusband’s income to $100,000, recorded the complainantsas “comfortable with an aggressive portfolio and prepared toaccept the volatility of investment markets from time-to-time”.It recommended restructuring the transport business as acompany to provide wages and superannuation to bothcomplainants. It also recommended obtaining an overdraftto pay off the housing loan and that they should borrowmoney to purchase two investment properties and commencea negative-geared, regular savings plan through Navigator.

The complainants accepted the recommendations made bythe representative, purchased two residential units inBrisbane and commenced a negatively-geared, share-basedsavings plan. The complainants soon experienced difficultiesmeeting the financial obligations which they incurred as aresult of implementing the plan. Both investment propertieswere sold at a loss.

The Panel found that the financial plan was defective, asdetails of expenses had not been recorded. In fact, thehusband was required to repay the capital of the loan for thetruck at $30,000 per annum out of a post-tax income of$50,000 per year. Expenses in relation to maintaining thechildren were also omitted.

The Panel said that the representative had failed to ascertainwhether the complainants had sufficient financial resources toundertake a geared investment, and if he had established thisshould not have advised the complainants to undertake sucha strategy.

The Panel also found the paperwork and assumptions inrespect of the investment properties were deficient, and thatprojections failed to take into account the risk of changes inthe rates of interest.

The complaint was upheld and the Member directed to paythe complainant’s losses of approximately $91,000.



Financial Planning


No. %

Agent/Broker 7 3

ASIC/ACCC 15 6


Member company 109 42






TOTAL 257 100


In June 1984 the complainant retired and had over$700,000. He sought and received a comprehensivefinancial plan from the Member. He was categorised asa very conservative investor but appreciated the need fora balanced approach. An asset allocation of 55% in cashand fixed interest capital secure investments, 25% in sharemarket-based investments and 20% in property-basedinvestments was recommended and accepted.

One of the investments was BT Hotel Trust. In March1997 it was recommended this be sold as the distributionforecast was “flat over the short to medium term”. The unitswere sold at a profit and $30,000 invested in OakfordProperty Trust. The funds raised were to build and operatea serviced apartment complex in Brisbane.

One aspect of the complaint to FICS was that therecommendation did not accord with the complainant’sinvestment profile. The Panel found that therecommendation to invest in Oakford Property Trust wasconsistent with the complainant’s investor profile. It didnot increase the percentage of the asset allocation whichwas invested in property.

There was a further purchase of units in Oakford PropertyTrust in July 1998, removing $20,000 from theconservative part of the asset to an investment which wasof a higher risk. The Panel found that thisrecommendation was not unreasonable in light of thematerial available to the adviser at the time.

There was also a complaint that the Member wasinstructed to sell the Oakford units at 80 cents on 14 May1999, and should have advised the complainant to sell at75 cents, as a sale at 80 cents was unachievable.

The Panel disagreed, and the final result was that thePanel did not uphold all three complaints.

The number of new stockbroking complaints remained steady –135 in 2002 compared with 134 in 2001.

This is the period in calendar days between the date acomplaint is first received and the date the investigation isfinalised or 31 December 2002, whichever is the earlier.

Complaints often involved a number of different issues but only thenature of the main complaint was recorded. The top complaint inrelation to stockbroking was service at 37% followed byinappropriate advice totalling 36%. The dramatic changes in thenature of stockbroking complaints from 2001 to 2002 wasprimarily due to changes in FICS statistical coding practices.


Stockbroking

Stockbroking








Investigation Time 2001 2002

No. % No. %

1 to 40 days 5 3 2 1

41 to 60 days 17 8 8 4

61 to 80 days 29 14 60 27

81 to 100 days 84 42 80 38

101 to 120 days 61 30 53 26

121 days & over 6 3 8 4

TOTAL 202 100 211 100


2001 2002No. % No. %

Distribution of Complaints 2002

No. %




Queensland 18 14


Tasmania 0 0

Victoria 37 27


TOTAL 135 100

Failure to meet consumer protection standard 1 1 0 0

Service 0 0 50 37




Values/charges 9 7 0 0


TOTAL 134 100 135 100

The most common products complained about were shares,derivatives or warrants at 65% and managed investments –shares at 28%.


Stockbroking

The complainant invested around $100,000 in thesharemarket in May 2002. The investment was split betweenfour companies and three of these performed reasonably well.However, one investment was made in partly-paid shares andit fell out of favour with the market for a variety of reasons.

The complainant referred to FICS in August 2002, claimingthat she did not know her poor-performing investment was inpartly-paid shares and that she had an obligation in October2002 to contribute another $1 a share, or another $20,000.She claimed she would never have bought partly-paid shareseven if the concept had been explained to her. She thenrelied on comments from her adviser after complaining in July2002 about the transaction, alleging the adviser told her thatthe company had three years in which to make the call andthat a call may not be made for that time. The call was notdelayed and fell due in October 2002.

The Member maintains the complainant understood the typeof investment she bought and that in any case the contractnote issued in May 2002 clearly stated the shares werepartly-paid. A quick resolution was needed before thecomplainant ran out of time to sell the partly-paid shares.

Both parties stood their ground and in order to break thedeadlock, FICS suggested a resolution which the Memberdeveloped and the parties accepted.

Without liability the Member offered to:

● Sell the 20,000 partly-paid shares at market, whichrealised about $4000

● Buy on behalf of the complainant 20,000 $1 rollinginstalment warrants at a cost of approximately $8000

● Fund the difference between the sale of shares and thepurchase of the warrants (approximately $4000).

The resolution allowed the complainant to defer the paymentof $1 on each warrant until November 2003; it allowed herto receive the benefit of capital movements and dividendpayments, it created an interest component which could betax deductible and realised a capital gains tax loss of around$15,000 for the complainant.

The cost to the Member was $4000 – and considerably lessthan the $19,600 originally claimed.



No. %

Investment Single Lump Sum 9 7

Managed Investments – Shares 38 28

Shares Derivatives Warrants 88 65

TOTAL 135 100


Investment Managed Shares TotalLump Investment DerivativesSum Shares Warrants

Service 0 28 22 50





TOTAL 9 38 88 135

This is the period in calendar months between the date a complaint is first referred to the Panel and a Determination is made or 31 December 2002, whichever is the earlier. It includes cases that have been referred to the Panel prior to 1 January 2002 that have been finalised during the year orremain open. The Panel determined 70% of stockbrokingcomplaints within six months of referral to the Panel.

Of the stockbroking complaints finalised by Case Managers56% were finalised in favour of the Member. The Panel found59% in favour of the Member, and the Adjudicator 40%.


Stockbroking


2001 2002Time taken No. % No. %

Up to 4 months 16 53 10 19

4 to 6 months 12 40 27 51

7 to 10 months 2 7 16 30


TOTAL 30 100 53 100

Complaint Outcomes

2001 2002No. % No. %






Outside RulesInvestment performance 6 1Member not involved 6 0Amount over $10,000 2 1








TOTAL 28 3 12 43 100


Stockbroking


The complainant phoned his adviser who was employedby the stockbroker Member and instructed him to sell137,500 Oropa Ltd shares. He said he told the adviserto sell them at 21.5 cents. The adviser says he wasinstructed to sell them at 22 cents but it was not possibleto obtain that price on that day or any time thereafter, andthat shares remained unsold until one month later. On thatdate the complainant instructed the adviser to sell them at2.6 cents and the sale was achieved at that price.

The complainant says he suffered a financial loss of$13,062 as a result of the adviser’s failure to carry out hisinstructions to sell at 21.5 cents. The adviser’s daybookfor 21 July recorded an instruction to sell at 22 cents. TheSEATS order also showed the order at 22 cents. ThePanel took note of these contemporaneous records andfound they supported the Member’s position. It alsocommented that the Member had little to gain by notgiving effect to the complainant’s instructions. Thecomplaint was not upheld.



Agent/Broker 6 5

ASIC/ACCC 2 1







TOTAL 135 100

Caution needs to be exercised in comparing the ManagedInvestments statistics for 2001 and 2002, owing to statisticalcoding difficulties that particularly affected the 2001 figures.

This is the period in calendar days between the date acomplaint is first received and the date the investigation isfinalised or 31 December 2002, whichever is the earlier. Itincludes cases that were received, but not finalised, in 2001. In2002 Case Managers took less than 120 days to deal with98% of the complaints, compared with 92% for 2001.

Managed Investments


Managed Investments









1 to 40 days 8 8 1 1

41 to 60 days 11 10 11 11

61 to 80 days 10 10 39 38

81 to 100 days 63 61 40 39

101 to 120 days 4 3 9 9

121 days & over 8 8 3 2

TOTAL 104 100 103 100

On Saturday 21 July 2001 the complainants, a Queenslandcouple, attended a presentation by a time share operator, amember of FICS, and signed up to buy a number of holidaycredits. The couple acknowledge they were given a copy ofthe scheme prospectus, a copy of the Constitution of the timeshare club and a cooling-off notice and said they were toldthey would receive an ownership certificate and a clubmembership in due course.

The cooling-off notice said that all primary offers of time-sharing interests were subject to a non-waivable five businessdays cooling-off period from the later of the date of signingthe application form or the formal documentation receipt date.

In early August the time-share operator sent the couple theirownership certificate and club membership card. On 13August 2001 the complainants gave notice that they wantedto withdraw from the scheme. Their complaint was lodgedwith FICS when the Member disputed their right to do this.

The Panel said there was no doubt that the complainantsreceived the prospectus, the cooling-off statement and a copy

of the application form at the time the investment was madeon 21 July. The Panel also agreed, as the Membermaintained, it was accepted in the time-share industry thatthese documents constituted the “formal documentation”, thatthey did not exercise their right to withdraw within the timeavailable to them.

However, the Panel found that the Member did not complywith ASIC’s requirement to replace its old cooling-off noticewith a new notice conforming to ASIC’s Pro Forma 208. ThePanel said that the Member’s statement in a note on theapplication form, that the cooling-off period ran from the dateon which the application was signed, was inconsistent withthe notice itself, which said that it ran from the later of thatdate or the formal documentation receipt date.

The Panel found it was entirely reasonable for thecomplainants to understand the expression “formaldocumentation” in the cooling-off statement to include theownership certificate and the club membership cards.

The Member was directed to refund all amounts paid bythem, plus interest from 21 July to 13 August 2001.Following this Panel decision, several other time-sharecomplaints were settled between the parties at CaseManager level.

Case Study 10Managed Investments

Complaints often involved a number of different issues but only thenature of the main complaint was recorded. The top causes forcomplaints in relation to managed investments are service at 43%,inappropriate advice at 31% and misrepresentation at 18%.

Managed Investments


2001 2002No. % No. %



Non-Disclosure fees/charges 12 15 5 8

Values/charges 5 6 0 0

Standard of Member service 16 20 26 43

TOTAL 80 100 61 100

The complainant invested in the Member’s wholesale-managed fund. She alleged that she was led to believe therewould be no exit fees, was not aware of the existence of aspread between entry and exit prices to reflect transactioncosts and would never have invested had she been aware ofthe spread costs. She also said she believed the risk factorsinvolving volatility extended to returns and not to fluctuationsin the principal invested. She also complained that theMember’s internal tax specialist had advised that tax savingscould be made by withdrawing funds prior to an incomedistribution and repurchasing the funds after distribution, andthat the timeframe for investments of five years as stated in theprospectus had been contradicted by the taxation advice.She was also under the impression the fund would pay adividend each year.

The Member responded generally that (with the possibleexception of a failure to specifically advise her about spreadcosts) it did not provide the complainant with misleadinginformation and it acted properly in accordance with its rightsand obligations under the Constitution of the fund in relationto all unit holders.

The Member conceded that its staff member’s conversationwith the complainant did not refer specifically to the spreadcosts when advising that wholesale fund investors would notbe penalised for early withdrawal. The Member says it is

offered to recompense the complainant for the spread costscharged on her withdrawal. Spread costs accrue directly tothe fund and are essentially a means of distributingtransaction costs equally between all unit holders andintended to offset stamp duty and other charges involved inmaking or realising investments as required in response tonew investments or withdrawals. The Member denied that theconversation with its taxation specialist occurred, that they areadvised to give general information only and to advise anyinvestor or potential investor to seek their own independenttaxation advice in relation to any fund.

The Member also argued that the prospectus does not statethat the principal invested is guaranteed. In fact, theprospectus states “investments in the funds are not deposits…and are subject to investment risks including possible delaysin repayment or loss of income or capital invested. Neitherthe payment of capital nor the investment performance of thefund is guaranteed by . . .”. It also points to the prospectusstating that investors “cannot be assured of good returns everyyear because markets go up and down”, and does notguarantee dividends each year.

The Panel considered that on balance the Member hadsatisfactorily answered the substance of the complaints. TheMember’s offer to reimburse the complainant for the spreadcosts associated with the withdrawal of funds is in no wayconsidered an admission by the Member that in any otherrespect the complaints had been conceded.

The complaint was not upheld.

Case Study 11Managed Investments


The most common types of managed investment complainedabout were cash at 52% and shares at 28%.

This is the period, in months, between the date a complaint isforwarded to the Panel for Determination and the date ofDetermination, or 31 December 2002, whichever is the earlier.It includes cases that have been referred to the Panel prior to 1January 2002 that have been finalised during the year orremain open.


Managed Investments

Distribution of Complaints 2002

No. %




Queensland 2 3


Tasmania 0 0

Victoria 15 24


TOTAL 61 100


Complaints by Investment Type No. %


Managed Investments – Cash 32 52

Managed Investments – Shares 17 28

TOTAL 61 100


Contract Type

Investment Managed ManagedNature of Complaint Annual Premium Investment Cash Investment Shares Total



Non-Disclosure fees/charges 0 2 0 2

Non-Disclosure Tax/Social Security 0 0 3 3

Standard of company service 5 16 5 26

TOTAL 12 32 17 61


2001 2002

Time taken No. % No. %

Up to 4 months 2 22 0 0

4 to 6 months 4 44 1 14

7 to 10 months 3 34 5 72


TOTAL 9 100 7 100

Case Managers finalised 52% of complaints in favour ofcomplainants. The Adjudicator and Panel did not finalise astatistically significant number of managed investmentcomplaints.


Managed Investments

Complaint Outcomes

2001 2002No. % No. %






Outside RulesMember not involved 3 3Amount over $100,000 1 0




Agent/Broker 0 0

ASIC/ACCC 0 0






Superannuation Complaints Tribunal 0 0


Community groups 0 0

IEC/ICA 0 0



TOTAL 61 100






TOTAL 15 0 0 15 100

The Service places significant emphasis on its educative role, participating in seminars, industry forums andAlternative Dispute Resolution (ADR) Group Forums.

The Service also publishes all Determinations of the Panel and the Adjudicator on the FICS website. The websitealso contains FICS contact details, Rules and Constitution, complaint forms, privacy information, a list of Memberswhich is updated daily, the FICS Annual Review, Bulletins, speeches and other information. The website also hasa search facility. During 2002 an additional “Review” section on the website also contained information aboutthe Independent Review of FICS which was carried out during 2002.

Bulletins issued by the Service during the year dealt with website changes, the Independent Review of FICS, Paneland staff appointments, Service procedures, liaison meetings, changes to the FICS Rules and Constitution, casestudies and information about new Members.


Education

Forums, Conferences and SeminarsIndustry

● FPA Principal Members and Dealers Conference, GoldCoast, 10 May 2002.

● Australian Friendly Societies Conference, Gold Coast, 13June 2002.

● Securities and Derivatives Industry Association (SDIA)Compliance Committee Meeting, 23 April 2002.

● SDIA Lunch 14 May 2002.

● Australian Life Underwriters Association ClaimsManagement Group, Sydney, 14 May 2002.

● IFSA Conference, Brisbane, 1 August 2002.

● National Professional Development Seminar, EldersInvestment Services, Adelaide, 17 September 2002.

Consumer

● Money Expo Adelaide (booth), 31 May – 2 June 2002.

● Consumer Forum held jointly with ABIO, IEC and TIO,Melbourne, 7 – 9 May 2002.

● Centrelink Financial Information Service Officers,Melbourne, 26 June 2002.

● ADR Forum, Melbourne, 8 October 2002.

Other

● Society of Consumer Affairs Professionals, 16 – 18 October2002.

● IEC Conference, 11 November 2002.

● International Finance Sector Ombudsman Conference, SouthAfrica, 10 – 12 April 2002.

Media Articles featuring FICS

● Money Management, 17 January 2002, September 2002.

● Sydney Morning Herald, 6 February 2002.

● Sunday Herald Sun, 17 March 2002.

● Money Magazine, March 2002, May 2002.

● Investor’s Advisor, 4 March 2002, July 2002.

● Sydney Morning Herald, Money Manager, 20 – 26 March2002, 28 August 2002.

● Independent Financial Advisor, 27 May – 3 June 2002,September 2002.

● The Age, 20 April 2002, 29 April 2002.

● The Australian 20 May 2002.

● The Australian Financial Review, 22 April 2002.

● Asset Magazine, May 2002.

● Weekend Australian, 20 – 21 April 2002.

● The Age Money Manager, 8 April 2002, 12 August 2002,9 September 2002.

● Law Institute Journal (VIC), August 2002.

● Law Society Journal (NSW), August 2002.

● Sunrise Exchange (Internet), 29 August 2002.

● Investor Daily (Internet), 29 August 2002, 10 September2002.

● Personal Investor Magazine, September 2002.

● Asset Magazine, September 2002.

● Australian and New Zealand Institute of Insurance andFinance – case studies from FICS appeared regularly during2002.

Other

● Video Interview with Financial Planning Resources.

MembershipThe Constitution of FICS provides for six different membershipcategories.

● Category A – life insurance

● Category B – reinsurers

● Category C – managed investments

● Category D – superannuation

● Category E – brokers, financial and security advisors

● Category F – non-voting (must be under a certain size to beeligible for this category).

Full details of the Membership categories can be found in theFICS Constitution, a copy can be obtained from the Service, orviewed on the FICS website.

All Members are listed on the FICS website, which is updateddaily and where Members have informed FICS of their websitedetails, the Member’s website can be accessed by clicking onthe Member’s name.

StaffAll case handling staff attended a two day negotiation trainingworkshop. In addition, two new Case Managers attended aconciliation workshop run on behalf of the SuperannuationComplaints Tribunal. Both enquiries officers also attended a oneday telephone skills course.

The Service welcomed Denny Meadows to the newly createdposition of National Operations Manager (replacing theposition of Legal Services Manager), Maria Romeo, ExecutiveAssistant, Andrea Joynes and Maureen Murrill, Case Managers,Michael D’Argaville, Panel Case Manager and LaurenBradford, Case Manager Secretary.

Accounting and Corporate Secretarial Function contracted outto IEC.


Administration

Change in Membership 2001–2002

CancelledMembership New Members Memberships Membership

Category at 31/12/01 2002 (at Member’s request) at 31/12/02

Category A 32 4 0 36

Category B 5 0 0 5

Category C 219 12 15 216

Category D 0 0 0 0

Category E 171 4 8 167

Category F 1,318 247 86 1,479

Total 1,745 267 109 1,903

Staff 2002

No.

Executive 2

Panel Case Manager 1

Case Managers 5

Panel Liaison 1

Enquiries Officers 2

Memberships 1

Administrative and secretarial 3.6

Total 15.6

Independent Decision-Makers 16

TOTAL 31.6


Organisation Chart 31 December 2002

Administration/Receptionist

EnquiriesOfficers

(2)

MembershipCo-ordinator

SecretaryCase Managers

(5)Panel CaseManager

Liaison andTechnicalSupportManager

KeyAdministrative Responsibility

Direct Reporting

Executive Assistant

NationalOperationsManager

Financial Industry ComplaintsService Limited

Board of Directors

Independent Chair3 Industry Members

3 Consumer Members

AdjudicatorChief

Executive

Panel

Independent ChairIndustry Representative

Consumer Representative

FICS Member Companies can be found on the website: www.fics.asn.au


Member Companies

FINANCIAL INDUSTRYCOMPLAINTS SERVICE LIMITED

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P O B o x 5 7 9 C o l l i n s S t r e e t We s tM e l b o u r n e V i c t o r i a 8 0 0 7

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annual review 2002 - financial ombudsman service · 1975 he was appointed managing director for...

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