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  • Afr Smart Investor Wolfe + Michael Fraser The Arbitrator

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    SenateBriberyInquiry
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    An excelent guide to the FOS arbitration scheme (aka the doom loop),

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    An excelent guide to the FOS arbitration scheme (aka the doom loop),

    Direitos autorais:

    © All Rights Reserved
    Baixe no formato PDF ou leia online no Scribd
    Sinalizar o conteúdo como inadequado
    20 visualizações9 páginas

    Afr Smart Investor Wolfe + Michael Fraser The Arbitrator

    Enviado por

    SenateBriberyInquiry
    An excelent guide to the FOS arbitration scheme (aka the doom loop),

    Direitos autorais:

    © All Rights Reserved
    Baixe no formato PDF ou leia online no Scribd
    Sinalizar o conteúdo como inadequado
    de 9
    Bayi Strategy Property BRU Muti es How Flight Centre MD Crossing the line from loved by billionaires »; | Graham Turner invests »»; _ investor to speculator » M AZ What the banks don’t | want you to know F The compensation [Maze As the banks try to contain the fallout from multiple financial advice scandals, James Frost and Kate Cowling show you how to prepare a complaint, what to expect from a review and how to negotiate a bigger payout. FEATURE becca Wolfe was 30 and seriously ill when she took ‘on Commonwealth Bank of Australia. She was trying to make the bank honour an income protection policy sold to her by one ofits financial planners. But the bank wasn't having any of it “The bank just buries you under paperwork. You slowly dig yourself out but they just keep burying you,” she says. ‘Wolfe had been struck down with post- traumatic stress disorder. The diagnosis followed a harrowing five months after her three-year old daughter Charlotte was diagnosed with a bone infection that required regular treatment and travel from their home in Swan Hill, Victoria, ‘The single mother was unable to work, care for her daughter or perform even the ‘most mundane household tasks. As the bills piled up and her mortgage fell into arrears, ‘Wolfe began what would become a marathon 1S-month dispute with the bank. Alternatively stonewalled and inundated with forms to fill out, Wolfe got to the brink of giving up. ‘When the bank said it was planning to void her policy on the basis of notes made by her doctor but never revealed to her, it almost tipped her over the edge. “Tcouldn't keep fighting. Ihad nothing lef,” she says. ‘Already suffering from the combination of poor health and terrible financial advice, Wolfe found herself at the mercy of an ‘opaque and combative complaints resolution process designed to dismiss and ultimately discredither. And stories similar to Wolfe's have become alarmingly common. ‘CBA as responded to such cases with one of the largest reviews of financial advice in history. ts Open Advice Review Program, OARD, is available to bank customers who received advice from Commonwealth Financial Planning or Financial Wisdom between 2003 and 2012. The bank says the process will be “fair, comprehensive and transparent”, Itsays the OARP demonstrates a commitment 10 “making it right for customers who may have received inappropriate advice”. ‘The OARP comes hard on the heels of a similar program run by Macquarie Bank ‘which is open to almost 200,000 clients, More recently, National Australia Bank has responded to claims of deficient adviser practices with its own initiative. But for the victims of poor, negligent or downright fraudulent financial advice, the banks’ programs remain shrouded in mystery. And significant differences among, 24.) aPRsManrnvesTon.coM.AU r the ways the schemes are being run mean customers may need to alter their approach depending on which bank they used. Do you have a claim? ‘Aisoa Maynard ofthe Financial Ombudsman Service (FOS) says a decision notto honour, sey, an insurance policy isnot enough to just a complaint to the Ombudsman, You should pursue one when the financial services provider cannot adequately explain ‘wy the claim has been rejected “ifthe insurerhasnt given aclea reason | oryouhave cause o disagree with thelr | assessment, you should escalate ether internally o externally” she says. Similarly investment losses alone ae not enough to support complain. But wien those loses are alarming or unexpected, the advice given should be reviewed in decal “But just because you received advice and lost money doesnt mean twas inappropriate,” Maynard says. “But when you experience losses of a magnitude you didn’t think was possible, you might have grounds fora dispute.” ‘Maynard is the FOS investments and {insurance expert, an alternative dispute resolution venue for aggrieved customers of financial service providers. I's the lat port of ‘all for investors who believe they have been lied to, ripped off or defrauded by financial planners before they take on the stressful and expensive court process. IFyou have a complaint, FOS recommends contacting your financial services provider first. Both FOS and the courts are bound by statutes of imitations - or time limits ~ that determine which complaints can be pursued “The statutes of limitations with FOS are six years from the date the losses occurred, ‘or two years from the customer's last ‘contact with the provider's internal dispute resolution team. For the courts, the statute of limitations for these cases is sx years. Legal experts say it's critical that investors are aware ofthese statutes. One institution Bank makes offer of ‘compensation Customer accepts offer ‘and withdraws from program ‘Customer rejects offer and makes counter-offer Potential to escalate to independent pane! ‘Assessment ‘outcome issued by poet the bank Bank makes no offer of compensation J Customer sat E decision pending x Customer ‘Customer Customer rejects offer withdraws rejects assessment and withdraws from program ‘outcome and makes from program counter.assessment ff Bank may berequiredto "Potential to remove customer from escalate to program ifno response is | independent panel received after a certain time oe —— in particular has been known to “run out the clock’ on disputes and leave investors who have legitimate complaints without recourse, Foreed into action Commonwealth Bank's Open Advice Review Program was launched on July 3, 2014. It followed a series of damning nevis reports, about adviser behaviour atts financial planning arms and the bank’s inadequate response to complaints from vietims. Judges and politicians who have examined the cases involving the sale of inappropriate investment products and churning of insurance policies by the bank’s advisers have described the behaviour as “systemic [Apiiecemeal approach from the bank, which tried to identify and compensate the clients of 27 financial planners in two initiatives code named Project Baringa and Project Hartnett, resulted in $52 million worth of compensation being paid to 1100 customers. Those programs, however, were found wanting in an independent review. The ~ THE BANK JUST BURIES YOU UNDER PAPERWORK. YOU SLOWLY DIG YOURSELF OUT BUT THEY JUST KEEP BURYING YOU @@@ REBECCA WOLFE, Former CBA client review concluded that thousands of ‘customers were disadvantaged by an uneven approach where different messages went t0 ifferent customers. Some clients were sent letters that contained no reference to issues ‘with their adviser or advice while others ‘were not contacted at al In April the nation's top bankers, including CCBA chief executive lan Narey, were summoned to Canberra for a Senate inquiry in which major bank CBOs were lambasted for their handling ofthe scandal ‘To counter growing disquiet from the ‘community about the actions ofits planners, (CBA had launched OARP in July 2014. It isa gold-plated dispute resolution program that now employs close to 500 full-time staff. (CBA was approached by Smart nestor for this story, The bank asked for, and was provided with, information about the story ‘well in advance of our deadline, Despite ths, itcould not make a representative available for an interviews, Pattern of behaviour “Tthink they were just hoping I would go away,” Rebecca Wolfe says. "When I was chasing them, I wouldn't hear back. They ‘wouldnt be in or would still be looking into it. Very rarely would Igeta call bac ‘Wolfe's experience neatly captures ‘everything that was wrong with the bank’ pre-OARP process. It was hostile, impenetrable and appeared to be stacked against her from the very start. ‘But her story does have a sive lining. After a year of getting nowhere with the bank, in November 2014, Wolfe launched a ‘campaign on social media to help resolve her asnsmarrmvestor.comay | 25 FEATURE | ‘complaint. That attracted the attention of Michael Fraser, an independent consultant ‘who steered her through the process and helped win hera settlement that was almost four times the first “fll and final offer” made bythe bank. Fraser doesn’t believe the OARP will produce better outcomes for victims of poor financial advice. “Its where complaints go to die,” he says. The CBA approach The OARP san opt proces. That means youmus conta che bankas wil ot Procevely seek you outand review your fle Ets say the opin process disadvantages those who are unable todefend thelrierests, suchas customers who are notengaged with thei finances or those that have ded ‘The program, however, does include a number of welcome nities offers tustomers up to $3000 worth of fee legal vie and freezes the states of limitations ‘complaints with both the courts and the Financial Ombudsman Service. ‘The OARP isa threestep process that starts with an internal review of your le. ‘Once that is complete the bank will deliver im asesment and make an fer if itbeieves oneis warranted, ‘At that pint you may conc oe of the thre law fs the bank has engaged as customer edvocates~ Slater & Gordon, Maurice Blackburn or Shine Lawyers = for thefte legal atc Ifyou donot gre with the bans ascessment, you can get an aditonal review ffoman independent review panel, which vrlrevisit he bank's offer and erauate Your counteroffer (fyou make one). Ifyou Ire stilunhappy withthe outeomeor ofr after the review by the panel you may then eseaateyourcaim o ether the Phancial Ombudsman Service or the cours, "en months after the OARP was announced, an independent report produced by Promontory Financial Group found the program had pad a total of $7,702 0 Eien, The report sated thatby the end of Api 2015, more than 7000 chents had regutered to have thei fies reviewed ‘The numberof people who have contacted the bank about the OARDP 599,425; but the bank doesnt count you as registered unt You have completed ze eight page form. Ofte 7257 customers who have completed the form, only 208 cases had been reviewed by theend of Apel. Just 2s eussomers or 13 percent, ad boon fered a total of $362,513, The average offer tnade by CBA to these 28 veins of poor financial advice is just $20,089. That may seem low but it dovetails with average offers ‘made by other institutions. Part ofthis is to do with the way offers ‘of compensation are calculated for victims ‘of poor financial advice. But low. all offers are also a common negotiation tactic. To get 2 fairdeal investors must understand how the figures are reached and, as we show you later, how to ge the bank to increase its offer. 6 NEVER HAVE A PHONE CONVERSATION WITH THE BANK. IF THE BANK CALLS, TELL THEM YOU ARE BUSY AND ASK THEM TO EMAIL OR WRITE TO YOU INSTEAD, 99 MICHAEL FRASER, Independont constant How an offer is calculated Ifyou have lost money andthe institution accepts that the advice was inappropriate, ‘compensation will be offered based on what your financial position might have been had Yu been given “the right advice”. Depending on how financial markets have performed, the capital you have lost may say lost. You may have merely “ost ess. ‘This is especially rue of investors who lost ‘money during the global financial eis For example, if you were sold a high-risk investment and incurred substantial losses ‘when you are in reality a conservative investor, the process will determine your true risk tolerance and arrive atareturn based on appropriate advice. These figures ‘wil be based on options the bank offered at thetime, Slater & Gordon lawyer and profesional negligence expert Mark Walter says this {s where disputes beeween the client and the bank can arise because a client's true position is subjective. “if your starting point was, What might a reasonable planner have done’ well a reasonable planner might have created any ‘one of 10 different outcomes so which is the right one?" he says. “This is a problem even with the OARP. The second independent report by Promontory Financial Group found that reliance on the judgment of individual assessors produced.

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