Review of the
Benchmarks for
Industry-based
Customer Dispute
Resolution Schemes
Final Report
July 2014
Commonwealth Consumer Affairs Advisory Council
© Commonwealth of Australia 2014
ISBN 978-1-925220-27-8
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Manager
Communications
The Treasury
Langton Crescent Parkes ACT 2600
Email: medialiaison@treasury.gov.au
Mr Colin Neave AM
Chair of CCAAC
2014
Dear Minister,
The Commonwealth Consumer Affairs Advisory Council (CCAAC) is pleased to provide
you with the review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
document (the CDR Benchmarks). Industry-based customer dispute resolution schemes
deliver significant benefits to both business and their customers, as they provide an
alternative to litigation. This is the first review of the CDR Benchmarks since their
establishment in 1997.
CCAAC would like to express its appreciation to the stakeholders that took the time to
provide submissions and engage in consultations. This assisted in clarifying dispute
resolution processes and addressing issues raised by stakeholders.
Overwhelmingly, stakeholders considered the CDR Benchmarks to be a valuable resource
for industry and customers in Australia. The CDR Benchmarks remain highly relevant, and
the principles are described as ‘immutable’ by a number of stakeholders. CCAAC suggests
minor revisions to the CDR Benchmarks Principles, based on stakeholder feedback and
consultation. CCAAC supports the revision and augmentation of the Key Practices to assist
dispute resolution services to implement the Principles. Given the aspirational nature of the
CDR Benchmarks, CCAAC considers that the CDR Benchmarks will not require further
review for some time. However, the Key Practices supporting the CDR Benchmarks, if
separated from the Principles, would allow revisions and updates as necessary.
I offer my thanks to, and acknowledge the expertise and commitment of, the CCAAC
members contributing to this study. Mr Gordon Renouf led work on this inquiry, with
support from the CCAAC Secretariat and contributions from other colleagues.
Yours sincerely,
Colin Neave
Chairman, Commonwealth Consumer Affairs Advisory Council
CCAAC Secretariat
Consumer Policy Framework Unit
The Treasury
PARKES ACT 2600
Telephone:
Facsimile:
02 6263 2111
02 6273 2614
EXECUTIVE SUMMARY
The Benchmarks for Industry-based Customer Dispute Resolution Schemes document (CDR
Benchmarks) was developed with the assistance of industry sector dispute resolution
schemes, consumer groups, government and regulatory authorities in 1997. The CDR
Benchmarks were produced in order to encourage and support the development of customer
dispute resolution schemes, recognising that industry-based dispute resolution is an effective
self-regulatory measure. Dispute resolution saves time and money for businesses and
customers, and is an accessible and cost-effective alternative to the court system.
The CDR Benchmarks set out six benchmarks: Accessibility, Independence, Fairness,
Accountability, Efficiency and Effectiveness. They outline a principle, purpose and list of key
practices that support each benchmark. The CDR Benchmarks therefore serve as a guide to
effective practice for the industry sectors that have established schemes to resolve disputes
between their industry members and individual customers. The CDR Benchmarks guide
customers as to what they should expect from industry-based, external dispute resolution
(EDR) schemes.
Since their inception, regulators in both Australia and New Zealand have referenced the
CDR Benchmarks. In some industry sectors, providers are required to participate in a
dispute resolution scheme. They are incorporated into the Australian Securities and
Investments Commission (ASIC) Regulatory Guide 139 for the financial sector, Approval and
oversight of external dispute resolution schemes (ASIC RG 139).1 The CDR Benchmarks are also
referenced in telecommunications legislation2 and are used by several industry-based EDR
schemes including the Financial Ombudsman Service and the Telecommunication Industry
Ombudsman. The Australian and New Zealand Ombudsman Association requires its
members to observe the benchmarks.
The Commonwealth Consumer Affairs Advisory Council (CCAAC) was asked to review the
CDR Benchmark’s document. CCAAC invited submissions and undertook consultations
with relevant stakeholders. CCAAC considered the ongoing relevance and usefulness of the
underlying principles, purposes and key practices for each benchmark; assessed whether the
CDR Benchmarks act as a guide to effective practice for industry-based customer dispute
resolution schemes; and considered whether the CDR Benchmarks could be modernised or
enhanced, including through the development of further implementation guidance.
CCAAC considers that the CDR Benchmarks retain ongoing relevance for industry dispute
resolution schemes across the economy. Overwhelmingly, stakeholders supported the CDR
Benchmarks, considering them a valuable resource in customer dispute resolution and,
therefore, in consumer policy more generally. The CDR Benchmarks were described as
‘immutable’ by a number of stakeholders, reflecting the usefulness of the standards. Further,
the CDR Benchmarks have been an influential reference point for dispute resolution
schemes, industry associations and governments. Appendix 1 provides an overview of the
consultation process.
On the issue of sponsorship for the benchmarks, CCAAC proposes that the Commonwealth
Minister with responsibility for competition and consumer policy should continue to
sponsor the CDR Benchmarks. CCAAC is of the view that this will assist in ensuring that all
1
2
Available at http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rg139-published13-June-2013.pdf/$file/rg139-published-13-June-2013.pdf, accessed 1 March 2014.
Telecommunications Legislation Amendment (Consumer Protection) Act 2014.
Page v
Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Australian governments remain aware of the CDR Benchmarks, and that the CDR
Benchmarks remain visible and useful to consumers.
CCAAC considers that the wording of the six benchmarks and their respective Principles
and Purposes continue to capture the key standards for industry-based, external dispute
resolution. However, CCAAC finds that the CDR Benchmarks would benefit from some
modernisation. Consequently, CCAAC suggests some minor revisions and updates to some
of the terminology, based on stakeholder comments, such as the change from ‘scheme’ to
‘office’, and ‘member’ to ‘participating organisation’.
CCAAC recommends reconfiguring the CDR Benchmarks by separating the Principles and
Purposes from the Key Practices. The Principles and Purposes should be retained (with the
minor changes recommended in this Report) as a stand-alone document. They are unlikely to
require further review in the medium term.
The Key Practices will become a separate document. They should be monitored and
updated from time-to-time in line with changes in the community and technology as they
emerge at the direction of the responsible Minister. CCAAC is of the view that stakeholder
input and consultation is essential to such a process.
This separation would more easily allow ASIC RG 139 to play a guidance role in the financial
service industry and the new Key Practices document to apply more generally to other
industries.
CCAAC considered whether further guidance material should be developed to support the
Principles and Purposes and Key Practices documents. CCAAC notes that stakeholders find
the ASIC RG 139 to be an excellent resource, and that its use of examples showing the
practical application of the principles is beneficial for financial dispute resolution schemes.
CCAAC recommends that schemes that are considering developing their own guidance
material should similarly use examples to demonstrate the application of the CDR
Benchmarks.
CCAAC considers that these actions will raise the profile of the CDR Benchmarks and affirm
their role in national consumer policy. A summary of the findings is at Appendix 2.
Page vi
Executive Summary
KEY FINDINGS
1.
The Principles and Purposes are strongly supported by stakeholders. They are an
important set of standards for customer dispute resolution, and have achieved their
original objectives. CCAAC is convinced of their ongoing relevance.
2.
There is a need for some minor revisions to the CDR Benchmarks, in particular to
reflect current community values such as ensuring access to customers with special
needs and utilising advances in information and communication technology. See
Appendix 3 for a copy of the revised Principles and Purposes, taking into account the
recommendations made in this report.
–
CCAAC finds that with these changes there will be no need to review the
benchmarks themselves for some time.
–
The benchmarks are currently supplemented by Key Practices. A considerable
number of suggestions were made for amended or additional key practices.
3.
CCAAC finds that a number of key practices should be updated and a number of new
key practices should be added. Recommended revisions and additional practices are
identified under the relevant benchmark discussions below. A copy of the revised
Key Practices, taking into account the recommendations, is at Appendix 4.
4.
CCAAC finds that once these changes are made, the Key Practices should be separated
from the CDR Benchmarks Principles and Purposes to become a living document that is
amended from time-to-time to ensure that it is responsive to the community’s changing
needs in relation to dispute resolution.
5.
–
The Key Practices could be revised and augmented from time-to-time in response
to stakeholder feedback, at the discretion of the Minister.
–
Stakeholders
should
be
encouraged
to
write
to
CCAAC
(CCAAC@treasury.gov.au), which will then report to the Commonwealth
Minister responsible for competition and consumer affairs, to suggest revisions
and updates to the Key Practices.
Active sponsorship would assist in further promotion of the benchmarks. The
Commonwealth Minister responsible for competition and consumer policy should be
the Minister responsible for the CDR Benchmarks.
–
This could be leveraged by ensuring all governments in the consumer protection
policy environment are aware of, and are connected to, the CDR Benchmarks.
Page vii
THE COMMONWEALTH CONSUMER AFFAIRS ADVISORY
COUNCIL
CCAAC Terms of Reference
CCAAC is an expert advisory panel, which provides advice to the Commonwealth Minister
responsible for competition and consumer policy.
CCAAC’s terms of reference are to:
•
consider issues, reports and papers referred to it by the Minister and report to the
Minister on their consumer policy implications, and in doing so take account of the need
for well-functioning markets with confident consumers;
•
identify emerging issues affecting Australian markets and consumers and draw these to
the attention of the Minister; and
•
when considering consumer policy issues, take account of their competition and other
relevant economic implications.
Membership
The membership of CCAAC consists of:
•
Mr Colin Neave AM (Chair);
•
Ms Carolyn Bond AO;
•
Professor Stephen Corones;
•
Ms Lynda Edwards;
•
Ms Deborah Healey;
•
Mr Peter Kell;
•
Mr Gordon Renouf;
•
Dr Rhonda Smith; and
•
Mr Ray Steinwall.
Page ix
REVIEW TERMS OF REFERENCE
CCAAC was requested to review the Benchmarks for Industry-based Customer Dispute
Resolution Schemes document (the Benchmarks Document).
For the review, CCAAC was requested to:
•
review the current function and use of the Benchmarks Document;
•
consider for each benchmark, the ongoing relevance and usefulness of the underlying
principles, purposes and key practices;
•
assess whether the Benchmarks Document is meeting the objective of acting as a guide
to effective practice for the industry sectors with customer dispute resolution schemes;
and
•
consider how the Benchmarks Document could be modernised or enhanced, including
through the development of implementation guidance.
CCAAC was requested to consider the views of interested stakeholders.
Page xi
CONTENTS
EXECUTIVE SUMMARY .............................................................................................................. V
Key Findings ........................................................................................................................ vii
THE COMMONWEALTH CONSUMER AFFAIRS ADVISORY COUNCIL .............................................. IX
REVIEW TERMS OF REFERENCE ............................................................................................... XI
GLOSSARY ............................................................................................................................ XV
INTRODUCTION ........................................................................................................................ 1
Overview of the CDR Benchmarks ......................................................................................... 1
Responsibility for the CDR Benchmarks ............................................................................ 2
Industry-based customer dispute resolution schemes ........................................................ 2
Benefits and ongoing relevance of the CDR Benchmarks .................................................. 3
Note on the scope of this review ............................................................................................. 5
Structure of this report ............................................................................................................ 5
REVIEW OF THE CDR BENCHMARKS ......................................................................................... 7
Broad comments .................................................................................................................... 7
Key themes ............................................................................................................................ 8
Key areas of improvement ...................................................................................................... 8
The Benchmarks .................................................................................................................. 10
Accessibility ..................................................................................................................... 10
Independence .................................................................................................................. 16
Fairness ........................................................................................................................... 19
Accountability .................................................................................................................. 23
Efficiency ......................................................................................................................... 27
Effectiveness ................................................................................................................... 30
CONCLUSION ......................................................................................................................... 35
REFERENCES ......................................................................................................................... 37
Publications .......................................................................................................................... 37
Appendix 1 — Overview of the Consultation Process ........................................................... 38
Appendix 2 — Summary of Findings .................................................................................... 40
Appendix 3 — Principles and Purposes................................................................................ 43
Appendix 4 — Key Practices ................................................................................................ 44
Page xiii
GLOSSARY
ABA
Australian Bankers’ Association
ACA
Airline Consumer Advocate
ACL
Australian Consumer Law The ACL is a cooperative reform of the
Australian Government and the States and Territories, through CAF.
ADMA
Association for Data-driven Marketing and Advertising
ADR
Alternative Dispute Resolution. An umbrella term for processes, other than
judicial determination, in which an impartial person assists those in a
dispute to resolve the issues between them.
ANZOA
Australian and New Zealand Ombudsman Association. The peak body for
ombudsmen in Australia and New Zealand.
ASIC
Australian Securities and Investments Commission. ASIC is Australia’s
corporate, markets and financial services regulator, which administers the
Australian Securities and Investments Commission Act (ASIC Act), and works
to enforce the Corporations Act.
CAF
Consumer Affairs Forum, officially titled the Legislative and Governance
Forum on Consumer Affairs. CAF's role is to consider consumer affairs and
fair trading matters of national significance and, where possible, develop a
consistent approach to those issues.
CALC
Consumer Action Law Centre
CCAAC
Commonwealth Consumer Affairs Advisory Council
CCLC
Consumer Credit Legal Centre (NSW)
CDR
Benchmarks
The Benchmarks for Industry-based Customer Dispute Resolution Schemes (as
published in 1997).
COSL
Credit Ombudsman Service Limited
EDR
External Dispute Resolution. Dispute resolution processes that are external
to the business or organisation for which the complaint relates.
FOS
Financial Ombudsman Service
FPA
Financial Planning Association of Australia
Industry
scheme
Any entity established by an industry to consider complaints made by that
industry’s customers, including those that do not apply the Benchmarks’
principles and key practices.
ICA
Insurance Council of Australia
NFSF
National Financial Services Federation
QCA
Queensland Consumers Association
TIO
Telecommunications Industry Ombudsman
Page xv
INTRODUCTION
At the 6 July 2012 meeting of the Legislative and Governance Forum on Consumer Affairs
(CAF)3, Ministers agreed with the Commonwealth Minister for Competition and Consumer
Policy that it was timely to review the Benchmarks for Industry-based Customer Dispute
Resolution Schemes (CDR Benchmarks). Consultation was undertaken with key stakeholders
in industry-based consumer dispute resolution schemes.
The Commonwealth Consumer Affairs Advisory Council (CCAAC) was subsequently issued
with Terms of Reference to review the CDR Benchmarks. On 24 April 2013, CCAAC released
an issues paper that invited responses from the public and stakeholders.
Twenty-nine submissions were received, with 27 non-confidential submissions published on
the CCAAC website.4
OVERVIEW OF THE CDR BENCHMARKS
The CDR Benchmarks were first published in 1997. They were developed with the assistance
of industry sector dispute resolution schemes, consumer groups, government and regulatory
authorities. The purposes of the CDR Benchmarks were threefold:
1.
To guide industry sectors seeking to set up a dispute resolution scheme for disputes
that arise between their members and consumers;
2.
For existing dispute resolution schemes, to provide objective guidance on practices to
aim for in the operation of these schemes; and
3.
To guide the expectations of consumers about the dispute resolution schemes.
The CDR Benchmarks were initially designed to apply to national, industry-based customer
dispute resolution schemes, including the banking, telecommunications and insurance
industries, on an economy-wide basis. However, they can also apply to state or territory
based industry or non-industry schemes.5 The CDR Benchmarks apply on a voluntary basis.
Since 1997, the CDR Benchmarks have been an important standard in guiding effective
practice for consumer dispute resolution. For example, the CDR Benchmarks have proven
effective principles for schemes, including the adoption of the CDR Benchmarks in both
Australian and New Zealand regulations for the approval of external dispute resolution
schemes,6 the significant number of resolved disputes reported by a variety of external
dispute resolution (EDR) schemes, and stakeholder feedback received for this review.
3
4
5
6
CAF was formerly known as the Ministerial Council on Consumer Affairs.
Non-confidential submissions are available on the CCAAC website at www.ccaac.gov.au.
Commonwealth of Australia, Department of Industry, Science and Tourism, Benchmarks for Industry-Based
Customer Dispute Resolution Schemes (Canberra: Commonwealth of Australia, 1997) p.1. Industry dispute
resolution schemes first began appearing in Australia in 1990. National Alternative Dispute Resolution
Advisory Council, A Framework for ADR Standards: Report to the Commonwealth Attorney-General (Canberra:
Commonwealth of Australia, 2001) p.21.
For example, their appropriation in Australian Securities and Investments Commission (ASIC) regulation.
Page 1
Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Responsibility for the CDR Benchmarks
The CDR Benchmarks were first developed by the then Department of Industry, Science and
Tourism. Existing dispute resolution schemes, consumer groups, governments and
regulatory agencies informed their development.
A number of the stakeholder submissions reflected concerns about the current ambiguity on
where responsibility for the CDR Benchmarks lies and conflicting views about where
responsibility for them should rest. Some stakeholders advocated for the CDR Benchmarks
to become an Australian Standard, akin to the Australian Standard on Complaints
Handling7, which is now an International Standard. However, others were concerned that a
dispute resolution standard would be too prescriptive and lack flexibility – particularly as
updates would become more bureaucratic and complicated. In addition, access to such a
standard would entail a cost that is likely to be prohibitive to consumers.
Another view was that a peak body for dispute resolution, such as the Australian New
Zealand Ombudsman Association (ANZOA) should assume responsibility for the CDR
Benchmarks. This also posed problems given that ANZOA does not have statutory
authority. Moreover, having practitioners of dispute resolution responsible for the CDR
Benchmarks could prompt a perception of a conflict of interest.
A clear status and location of responsibility for the CDR Benchmarks is necessary to ensure
the CDR Benchmarks receive attention and promotion in the consumer policy arena. CCAAC
is of the view that the CDR Benchmarks are most appropriately sponsored by the
Commonwealth Minister for competition and consumer policy. The profile of the CDR
Benchmarks could be raised by relaunching the CDR Benchmarks, including in the wider
consumer policy governance arrangements. This would maximise awareness of the CDR
Benchmarks for customers and industry sectors.
Industry-based customer dispute resolution schemes
For businesses, there is a clear benefit to avoiding disputes as they can lead to reputational
damage and monetary loss. However, disputes may arise when businesses and customers
disagree about their rights, responsibilities and obligations. A variety of mechanisms exist to
resolve these disputes, including internal dispute resolution and court processes. However,
not all dispute resolution processes are suitable or effective in all circumstances. For
example, the courts are not always accessible to consumers and internal dispute resolution
processes are not always appropriate to resolve a dispute.
Alternative dispute resolution (ADR) and industry-based customer dispute resolution
schemes provide a further option for customers and businesses to resolve disputes. An
impartial person assists parties to resolve the situation, without requiring resolution through
court action or tribunal involvement. For both customers and businesses, ADR is also usually
more flexible, less expensive and easier to access than a judicial course of action.
Consequently, a number of industry dispute resolution schemes were developed to service
industry participants and their customers, with specialist knowledge of their sector and any
applicable regulatory or quasi-regulatory frameworks. Complementing other standards for
complaint handling and principles for dispute resolution, the CDR Benchmarks promote best
practice for industry dispute resolution schemes in relation to design, continuous
improvement, and evaluation of operations.
7
Standards Australia, Australian Standard on Complaints Handling, AS 4269 – 1995 (Canberra: Standards
Australia), 1995.
Page 2
Introduction
Benefits and ongoing relevance of the CDR Benchmarks
The CDR Benchmarks are not mandated by law or regulation, but a number of industrybased schemes have committed to them.8 In addition, for some industry sectors in Australia
and New Zealand where membership of a dispute resolution scheme is required, adherence
to the CDR Benchmarks is one of the criteria used to approve these schemes. In such sectors,
the CDR Benchmarks are formally applied through regulatory arrangements. For example,
in Australia, the Australian Securities and Investments Commission (ASIC) employs the
CDR Benchmarks in its guidance for the financial and credit industry sectors.9 In
New Zealand, the CDR Benchmarks are a mandatory consideration for Ministers in relation
to financial service provision, and the CDR Benchmarks are employed in relation to dispute
resolution in the electricity and gas industries.10
The issues paper sought comment from stakeholders on whether the CDR Benchmarks were
used by industry schemes, examples of how they were employed, and their utility.
Suggestions for improvement were also canvassed. Information was also sought on other
standards and guidelines commonly in use; how these were also applied in conjunction with
or as an alternative to the CDR Benchmarks; and any inconsistencies.
The CDR Benchmarks are comprised of six attributes and their underlying principles:
•
Accessibility – the scheme makes itself available to customers by promoting knowledge
of its existence, being easy to use and having no cost barriers;
•
Independence – the decision-making process and administration of the scheme are
independent from scheme members;
•
Fairness – the scheme produces decisions which are fair and seen to be fair by
observing the principles of procedural fairness, by making decisions on the information
before it and by having specific criteria upon which its decisions are based;
•
Accountability – the scheme publicly accounts for its operations by publishing its
determinations and information about complaints and highlighting any systemic
industry problems.
8
For example, the Telecommunications Industry Ombudsman (TIO) has an explicit commitment to the CDR
Benchmarks, and the Airline Consumer Advocate (ACA) has stated that the CDR Benchmarks ‘pervade all
[it] does, and how it does it.’ TIO, p.1; ACA, p.2.
ASIC Regulatory Guidance 139 (RG 139).
The Financial Service Providers (Registration and Dispute Resolution) Act 2008 (NZ), the Electricity Industry Act
2010 (NZ) and the Gas Act 1992 (NZ) (the Acts) require all financial service providers who offer financial
services to retail clients, electricity distributors and retailers, and gas distributors and retailers to be a
member of a dispute resolution scheme. Those dispute resolution schemes need to be approved by the
responsible New Zealand Minister under the relevant Act. The Acts reference the CDR Benchmarks
Principles when providing for the purpose of dispute resolution schemes, for example in the Electricity
Industry Act 2010 (NZ) the purpose of the dispute resolution scheme is to ensure that:
a) any person…who has a complaint about a member has access to a scheme for resolving the complaint;
and
b) the scheme is accessible, independent, fair, accountable, efficient, and effective.
The Acts also refer to the CDR Benchmarks Principles in the mandatory considerations the Minister must
have regard to when considering an application to become an approved scheme under the legislation. For
example, the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (NZ) states that the
Minister must consider an application in light of the principles of accessibility, independence, fairness,
accountability, efficiency, and effectiveness.
9
10
Page 3
Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
•
Efficiency – the scheme operates efficiently by keeping track of complaints, ensuring
complaints are dealt with by the appropriate process or forum and regularly reviewing
its performance.
•
Effectiveness – the scheme is effective by having appropriate and comprehensive terms
of reference and periodic independent reviews of its performance.
In consultations, a number of the stakeholders described the CDR Benchmarks as
‘immutable’. CHOICE affirmed the relevance of the CDR Benchmarks, and supported
ensuring that they continue to be able to be applied to new forms of dispute resolution.11 The
Credit Ombudsman Service Limited (COSL) also noted that the CDR Benchmarks should be
technology and media neutral.12 CCAAC supports this view; the CDR Benchmarks have
proven to be universal, and should continue to be so. Part of this success is the flexibility of
the CDR Benchmarks in their application. The Association for Data-driven Marketing and
Advertising (ADMA) argues that the CDR Benchmarks should remain flexible because of the
variance in size, purpose and maturity of industry schemes.13
The Corporations Regulations and National Credit Regulations note that ASIC must take
into account the CDR Benchmarks when considering whether to approve an EDR scheme.14
In addition, the ASIC Regulatory Guide 139 (ASIC RG 139), Approval and oversight of external
dispute resolution schemes, explains how EDR schemes can obtain initial approval from ASIC
to operate in the Australian financial system and/or Australian credit system, and once
approved, their ongoing requirements to maintain approval.15
In at least one instance, the CDR Benchmarks Principles were built into the performance
agreements of scheme staff, in order to provide visibility for how their roles contribute to the
schemes broader organisational commitment. In addition, the CDR Benchmarks inform
instructional materials for some schemes.16 Such adoption into dispute resolution practices
and regulation confirms the ongoing relevance of the CDR Benchmarks.
While submissions universally supported the CDR Benchmarks, many stakeholders
suggested enhancements for one or more of the benchmarks, as informed by their
experience. The next section reviews each benchmark in turn, with suggestions for
improvement drawn from submissions and aggregated where more than one stakeholder
suggested similar changes.
11
12
13
14
15
16
CHOICE, p.5.
Credit Ombudsman Service Limited (COSL), p.4.
Association for Data-driven Marketing and Advertising (ADMA), p.2. For example, ADMA noted that the
CDR Benchmarks were used by ACL regulators’ National Group Buying Work Group to assess changes
made to the Australian Group Buying Code of Practice. Although the Code does not precisely align with the
CDR Benchmarks, the Work Group’s feedback, based on the CDR Benchmarks assisted in improving
incremental changes made to the Code. Such improvements included spot checks, controls over numbers of
vouchers sold and improved accessibility and clarity or refund policies, with a measurable reduction in
complaints as a result.
ASIC RG 139, Approval and oversight of external dispute resolution schemes, p.10; National Consumer Credit
Regulations, 10(3), accessed 14 February 2014.
The ASIC RG 139 guidance should be read in conjunction with the ASIC Regulatory Guide 165 (RG 165),
Licensing: Internal and external dispute resolution explains what Australian Financial Services licensees,
unlicensed product issues, unlicensed secondary sellers, credit licensees, credit representatives, unlicensed
carried over instrument lenders and securitisation bodies must do to have a dispute resolution system in
place that meets ASIC’s requirements. However, ASIC RG 165 does not specifically reference the CDR
Benchmarks.
TIO, pp.1-2.
Page 4
Introduction
NOTE ON THE SCOPE OF THIS REVIEW
A number of submissions commented on matters that are outside of CCAAC’s role and
purpose. Although CCAAC considered all submissions, it cannot comment on some issues
raised as they are outside the scope of the Terms of Reference for this review. However,
CCAAC expects that its findings will enable both schemes and governments to consider how
to improve industry-based dispute resolution to further benefit customers, businesses and
the wider economy.
CCAAC notes that the findings of its review are complementary to those of the Productivity
Commission in the draft report of its Inquiry into Access to Justice Arrangements.17 Further
information on the inquiry is available at www.pc.gov.au/projects/inquiry/access-justice.
STRUCTURE OF THIS REPORT
The following section, Review of the CDR Benchmarks, describes the stakeholder feedback
received for each of the benchmarks, and suggests ways in which the benchmarks could be
enhanced. The content of this chapter is largely informed by the submissions received in
2013 and consultations undertaken in 2014.
The Conclusion considers ways in which the CDR Benchmarks could be updated and
modernised. It also discusses lifting the profile of the CDR Benchmarks through relaunching
the CDR Benchmarks as separate documents after minor revisions to the Principles, and
revised and augmented Key Practices.
When reading this report, it should be noted that the CDR Benchmarks cannot always be
discussed as separate and distinct attributes and principles. While comments from
stakeholders are generally categorised under each of the attributes to which they apply, in
many cases, the comments apply to more than one attribute. Where this occurs, the report
refers to related sections.
17
Productivity Commission, Access to Justice Arrangements, Draft Report, Canberra, 2014.
Page 5
REVIEW OF THE CDR BENCHMARKS
Feedback from stakeholders relates to three key themes: edits to update the CDR
Benchmarks; minimum standards or requirements for schemes; and the need for practical
implementation.
The three key themes in the CDR Benchmarks that should be the primary focus of
improvement are:
•
Accessibility – being readily available to a variety of customers by promoting
awareness of the scheme, being easy to use and having no cost or other barriers;
•
Accountability – publicly accounting for scheme operations by publishing complaint
information, determinations and other outcomes, and systemic industry problems; and
•
Effectiveness – dispute resolution schemes having appropriate and comprehensive
terms of reference and periodic independent review of performance, informed by
stakeholder feedback.
Generally, there were three main approaches to reviewing the CDR Benchmarks: making
changes to modernise the CDR Benchmarks; including supplementary key practice elements;
and including additional key practices. Stakeholders strongly supported CCAAC’s
suggestion to include augmented Key Practices in a separate document which could be
revised as necessary. As mentioned in the previous section, revisions of the Key Practices
could occur as needed and in a less formal manner than a review, but would still be
undertaken in consultation with key stakeholders.
BROAD COMMENTS
The broad comments on the CDR Benchmarks addressed in this section include the
flexibility of the CDR Benchmarks, suggestions to reorder or add to the CDR Benchmarks,
and the CDR Benchmarks as a minimum standard. Cameronralph Navigator suggested
improvements to the Preface, suggesting that it should include discussion of the importance
of schemes endeavouring to achieve an appropriate balance between the interests of
customers and businesses, and between different benchmarks.18 In addition, this consultant
contended that the Principles and Purposes should be cast more broadly to reflect schemes
today, and identified gaps in the discussion of key practices in most of the benchmarks.19 The
Queensland Consumers Association (QCA) considered that the CDR Benchmarks should
refer to ‘community standards’ as well as ‘good industry practice’.20
While some submissions raised the issues of dispute resolution in the building industry, this
is primarily an issue for the states and territories and beyond the scope of this review, which
was designed to assess the ongoing relevance of the CDR Benchmarks and suggest
improvements. Stakeholders also suggested that consumer financial hardship could be
18
19
20
Cameronralph Navigator, p.6.
Cameronralph Navigator particularly identified gaps in the discussion of key practices in the Accessibility,
Fairness and Accountability Benchmarks, sections C to G and B, D and G, pp.6-9.
Queensland Consumers Association (QCA), p.2.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
acknowledged in the CDR Benchmarks, with the observation that financial hardship requires
a more consistent approach.21 This point is addressed below, under Fairness.
The Consumer Credit Legal Centre (CCLC) submitted that the CDR Benchmarks should
ensure all dispute resolution schemes meet a minimum standard.22 The Australian Bankers’
Association (ABA) argued that non-adherence to the CDR Benchmarks should have
consequences for schemes that are not able to meet critical operational requirements.23 The
financial sector in general has different obligations to the CDR Benchmarks, provided in
ASIC RG 139.24
The ABA made the point that in order for schemes to maintain conformity to the CDR
Benchmarks, additional resourcing and funding is likely to be required to avoid a decrease in
services to customers and industry. Currently, there is no government financial support for
some of the dispute resolution schemes. The ABA argues that industry-funded EDR schemes
provide an alternative and cost-effective route for access to justice, rather than legal action
that can have considerable costs for governments, and therefore deserve some government
support.25
CCAAC is of the view that responsibility for customer dispute resolution rests with relevant
industry sectors and that there is an important reputational imperative for such dispute
resolution schemes.
KEY THEMES
Across the CDR Benchmarks, there were three key themes that arose during stakeholder
consultation: the existing CDR Benchmarks should be revised for clarity and modernised;
there should be minimum standards or requirements for EDR schemes to meet; and the need
for additional key practices and guidance to support the EDR schemes.
A number of stakeholders were of the view that the CDR Benchmarks should require the
stipulation of additional key practices, or minimum requirements or standards. These
suggestions are discussed under the Accountability section. CCAAC considers that a
revision of the Key Practices may provide a non-regulatory means of responding to these
views. Overwhelmingly, stakeholders sought additions and revisions to the key practices, or
improved guidance material. It is clear from all of the submissions that the key practices are
already a necessary resource for schemes. Expanded practices would increase the value of
the resource for CDR schemes.
KEY AREAS OF IMPROVEMENT
Apart from a few broad comments, stakeholders commonly responded to each of the CDR
Benchmarks in turn, with suggestions for improvement. Many of these suggestions related to
enhancing the Key Practices. The CDR Benchmarks receiving the most feedback related to
Accessibility, Accountability and Effectiveness.
21
22
23
24
25
Insurance Council of Australia (ICA), p.4; Australian Bankers’ Association (ABA), p.5.
Consumer Credit Legal Centre (CALC), p.3.
ABA, p.3.
Available at http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rg139-published13-June-2013.pdf/$file/rg139-published-13-June-2013.pdf, accessed 1 March 2014.
ABA, p.4. For example, the Financial Ombudsman Service (FOS) is not supported by government funding.
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Review of the CDR Benchmarks
Accessibility issues include referral to schemes; scheme awareness; particular consideration
of special needs, cost and other barriers; and the issue of representation. For example, access
to schemes needs to be balanced with application of the scheme’s terms of reference to
exclude disputes not within a schemes’ purview, and should include information on other
referral points.26 A number of stakeholders noted that the promotion of schemes should be
sensitive to customers with special needs, and should focus on customers who are underrepresented in customer dispute resolution schemes – but also, that the CDR Benchmarks
should itemise ways in which this could be achieved.27 Stakeholders were also particularly
concerned about legal representation, particularly in relation to ‘credit repair’, where
customers pay considerable fees for legal representation that in many cases is not required.28
Accountability matters include transparency in decision-making, addressing noncompliance, obtaining member and customer feedback on the EDR scheme’s operation and
experience of dispute resolution; reporting; and independent review. A number of
stakeholders expressed the view that reporting requirements should be enhanced, and in
addition, that determinations, decisions and other outcomes be published where possible.29
The obligation on scheme members to follow the decisions of the EDR scheme is a matter of
paramount importance. Without powers to enforce binding decisions, or consequences for
non-compliant scheme members, dispute resolution schemes cannot be a viable alternative to
court action. This was a particular concern for dispute resolution experts.30
The next section considers each of the benchmarks in turn with reference to stakeholder
views. The findings for each benchmark discern the core issues, and where possible, suggest
a remedy or approach that is designed to advance the operation of the benchmarks.
26
27
28
29
30
ABA, p.3; Cameronralph Navigator, pp.6-7.
For example, Australian and New Zealand Ombudsman Association (ANZOA), p.6; ABA, p.3; Baljurda
Comprehensive Consulting, p.4; CHOICE, pp.7-8.
ABA, p.4.
ANZOA, p.9; Baljurda Comprehensive Consulting, pp.8-9; Cameronralph Navigator, p.8; CHOICE, p.9;
Consumer Credit Legal Centre (CCLC), p.11; COSL, p.8; National Financial Services Federation (NFSF), p.4.
ANZOA, pp.8-9, 11; Cameronralph Navigator, p.9; CHOICE, pp.11-12; FOS, p.2.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
THE BENCHMARKS
Accessibility
Underlying principle: The scheme makes itself readily available to customers by
promoting knowledge of its existence, being easy to use and having no cost
barriers.
Purpose: To promote customer access to the scheme on an equitable basis.
While most submissions did not mention revising this principle, the ANZOA suggested that
the accessibility principle statement could be reworded for the purposes of improving clarity
and modernisation.31 While one stakeholder suggested that the term ‘special needs’ was
outdated,32 it is CCAAC’s view that special needs encompasses a diversity of needs, and is
not simply related to people with disability or who are experiencing difficulties with print
literacy. These and a number of other issues that were also raised in relation to the
Accessibility Benchmark are detailed below.
Referral to schemes
Some stakeholders noted difficulties of referring to an EDR scheme after making a complaint
to an industry member. ANZOA argued that the CDR Benchmarks should include a new
provision requiring ‘deadlock procedures’ to be reasonable, so members do not stymie
attempts for resolution before referral to EDR.33 For some businesses, internal complaint
handling practices require a ‘deadlock’ before a dispute is referred to or can be dealt with by
a dispute resolution scheme. ‘Reasonable deadlock procedures’ means that provisions in the
internal dispute resolution mechanisms of a participating organisation must be just, and
must allow the office to deal with a complaint where it is clear that it was not resolved to the
satisfaction of the person making the complaint in a reasonable time.34
Similarly, the ABA pointed out that accessibility needs to be balanced with a clear and quick
application of the scheme’s terms of reference to exclude disputes not within the scheme’s
scope. If a dispute is deemed to be outside of the scheme’s terms of reference and a consumer
appeals that decision within 30 days, schemes should exercise further judgement.35
CCAAC considers that additional key practices could include routines to assist schemes to
‘triage’ complaints received, in order to quickly assess disputes and refer them to a more
appropriate forum if necessary. Complaints could be referred to an alternative forum for
access to justice or resolution (such as a regulator); considered alongside another dispute
resolution process where there may be an overlap of jurisdiction; or accepted for
investigation and resolution. This would reduce time and duplication, and serve customers
more efficiently and effectively.
31
32
33
34
35
ANZOA, p.5. It should be noted that the ANZOA submission was supported in its entirety by submissions
from the Banking Ombudsman Service; the Electricity and Gas Complaints Commissioner; the Energy and
Water Ombudsman NSW; the Energy and Water Ombudsman Queensland; the Energy and Water
Ombudsman Victoria; the Financial Ombudsman Service; the Public Transport Ombudsman Ltd; and the
TIO. The TIO submission was in turn supported by the Australian Communications Consumer Action
Network.
COSL, p.3.
ANZOA, p.10.
ANZOA, p.10.
ABA, p.3.
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Review of the CDR Benchmarks
Promotion of schemes
Many stakeholders noted the importance of dispute resolution schemes promoting their own
existence to the community. The Insurance Council of Australia (ICA) noted that the
significant increase in the number of customers accessing dispute resolution schemes over
the last decade indicates that efforts of schemes to increase consumer awareness have been
effective.36 CCAAC notes that this correlation does not necessarily mean there is a causal
relationship; the increase in awareness of dispute resolution schemes could also indicate
non-compliance with relevant laws or regulation by scheme members, or inadequate internal
complaints handling.
CHOICE proposed that an additional benchmark of ‘Awareness’ be included, arguing that
‘Accessibility’ is generally associated with issues of equity in access, but the principles and
practices supporting scheme awareness are different and should be afforded separate
treatment. CHOICE argues that increasing awareness of dispute resolution schemes has
ancillary benefits of increased awareness of other regulation applying to a dispute, and
suggests that a scheme’s key practices should include making themselves known to
community organisations and (financial) counsellors.37 Consultations with stakeholders did
not indicate support to expand the CDR Benchmarks, particularly given their current
presence in legislation. CCAAC considers that this could be addressed in revised Key
Practices or a scheme’s own guidance material.
While other stakeholders overwhelmingly considered that the existing principles should
remain, a number of stakeholders support enhancing awareness practices. For example, a
submission from Baljurda Comprehensive Consulting suggested that Accessibility should
include itemising ways in which scheme members inform customers about their scheme.38
Similarly, another submission argued that the CDR Benchmarks should acknowledge the
importance of schemes identifying key referral contact points and promoting awareness of
existence, services and details. In working with industry dispute resolution schemes,
Cameronralph Navigator found promotional efforts to be more effective than media
promotion and suggests this be included as a key practice.39 It is CCAAC’s view that these
suggestions could also be accomplished through revised key practices, which could include
promoting dispute resolution schemes on the websites of consumer agencies and advocacy
services, as well as on the websites of participating scheme members.40
Cameronralph Navigator noted that key practices relating to ‘appropriate techniques to
settle complaints’ under the Accessibility Benchmark would be more appropriately located
under the Fairness Benchmark.41 Of course, it is important that people with particular needs
who access the scheme are considered in all aspects of the key practices. This will be
discussed further in the next section.
CCAAC considers that government agencies could also play a role in increasing awareness
of EDR schemes. The Australian Consumer Law (ACL) applies nationally and in all states
and territories, and to all Australian businesses, and provides important protections to
consumers including in relation to unfair contract terms, consumer guarantees, product
safety and a range of consumer redress options. Given that customers are likely to search for
information on the ACL in the event of an unfavourable consumer transaction, CCAAC
36
37
38
39
40
41
ICA, p.3.
CHOICE, pp.4,7-8.
Baljurda Comprehensive Consulting, p.4.
Cameronralph Navigator, pp.6-7.
ICA, p.2; CCLC, pp.2-3; CALC, pp.1-3.
Cameronralph Navigator, p.7.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
suggests that state and territory consumer agencies link to the ACL website, information on
EDR schemes and the CDR Benchmarks.
On balance, CCAAC considers that scheme awareness is positioned appropriately under the
Accessibility Benchmark and does not see a need for an additional benchmark. CCAAC is of
the view that additional key practices about the promotion of schemes would be beneficial to
assist EDR schemes and in turn, the broader community. CCAAC considers that promotion
efforts should focus on areas where a customer is likely to seek information in the event of a
dispute.
Consideration of special needs
Some stakeholders stated that the Accessibility Benchmark did not adequately address the
consideration of the special needs of some customers. The ICA argued that accessibility for
customers with special needs could be clarified further in the Accessibility Benchmark, with
minimum requirements established – perhaps also explicitly identifying members of the
community who are experiencing disadvantage or who have special needs.42 CHOICE
considered that the Accessibility Benchmark should more explicitly address the potential
exclusion of customers who may be experiencing disadvantage or with other particular
requirements.43 For example, ANZOA and the Consumer Action Law Centre (CALC) argue
that the CDR Benchmarks should not require complaints to be made in writing.44 If applied
legalistically, this could render some customers unable to make a complaint, particularly
people with physical or intellectual disability; of culturally and linguistically diverse
backgrounds; or experiencing difficulties with print literacy. CHOICE noted the potential for
customers experiencing disadvantage or with special needs to be excluded from EDR.45
Further, ANZOA considers that the CDR Benchmarks should specify appropriate facilities to
maximise participation of all persons making complaints.46
Accessibility is an area affected by technological change, so EDR processes should be
available in a variety of formats. The CCLC proposed that the CDR Benchmarks should
require minimum standards for accessibility in order to meet and recognise diversity, to
prevent the exclusion access to the service. The CCLC notes that teletypewriter and language
interpreting services should be available, that standard letters should be translated into
languages other than English, and that provision should be made for customers with vision
impairment or difficulty reading.47 In addition, some stakeholders observed that further
promotion of schemes should focus on demographically under-represented customers and
customers with special needs, and that the CDR Benchmarks should specify how schemes
promote their existence in ways sensitive to them.48 The CALC also submitted that EDR
schemes should be required to review the way industry members inform customers about
the schemes.49
CCAAC considers that there would be considerable merit in providing extra key practices
for EDR schemes in relation to the consideration of customers with special needs. Changes in
technology in recent years mean that many people who previously may have been prevented
from making complaints are now more easily able to do so. Additional key practices and
42
43
44
45
46
47
48
49
ICA, p.3.
CHOICE, pp.7-8.
CALC, pp.1,3; see also CCLC, p.4.
CHOICE, p.13.
ANZOA, p.6.
CCLC, p.4.
ABA, p.3; ANZOA, p.6.
CALC, p.3.
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Review of the CDR Benchmarks
procedures to assist schemes to welcome customers with special needs, such as disability or
cultural diversity, would help raise dispute resolution services as an option. Schemes could
also consider linking with advocacy services to enhance their promotion efforts to the extent
that they do not already.
No-cost to consumers
Several stakeholders argued strongly that a key priority for scheme accessibility is that they
require no fees or charges to customers.50 The Financial Planning Association of Australia
(FPA) was of the view that no monetary cost for the complainant should remain a key
practice of accessibility in order to cater for customers with legitimate disputes and limited
resources.51 However, FPA raised concerns with a loophole that allows vexatious claims to
progress and divert resources away from valid claims.52 FPA suggested that a possible
process could include an initial investigation, after which claims that have no basis for
complaint are not permitted to continue, unless there is cost sharing between the customer
and the provider.53
In CCAAC’s view, no-cost dispute resolution is an essential component of accessibility for
consumers, so that customers are not prevented from accessing dispute resolution because of
their financial situation. However, CCAAC also understands some of the resourcing
difficulties faced by EDR schemes, and the need to ensure that time is not consumed
unnecessarily by ‘vexatious’ or ‘frivolous’ claims. One solution may be the ‘triage’ option
mentioned previously. Additional key practices to support the appropriate use of a scheme’s
resources and minimise the risk of unreasonable costs to scheme members directly, as well as
the schemes themselves, and in turn support the sustainability of no-cost dispute resolution
would be useful.
Representation
CHOICE was of the view that legal representation should not be required in dispute
resolution.54 The CCLC argued the benchmark standard should be that paid representatives
are banned from dispute resolution processes.55 The CCLC raised concern about paid
consumer representatives in dispute resolution, contending that no party should be able to
claim costs of representation as part of the dispute.56 As a provider of free legal advice and
representation to EDR consumers, the CCLC notes the benefits of their service for customers
and schemes. Disputes are more focused, the process is more clearly explained, expectations
are managed and settlements suggested. CCLC provides representation where the matter is
complex or the consumer is disadvantaged.57
The COSL noted that legal representation under their scheme is discretionary and mostly
exercised for the benefit of the complainant. COSL noted that as their members become more
experienced at responding to complaints, their need for legal representation is reduced,
which amplifies the power imbalance faced by the consumer complainant. COSL suggests
50
51
52
53
54
55
56
57
CHOICE, p.8, Energy and Water Ombudsman NSW, p.1; COSL, p.4; QCA, p.1; CCLC, p.4.
Financial Planning Association of Australia (FPA), pp.2-3.
FPA, pp.1-2.
FPA, pp.1-2.
CHOICE, p.6.
CCLC, p.8.
CCLC, p.7.
CCLC, p.6.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
amending clauses to be more positive about the capacity of customers to access dispute
resolution without legal representation, whilst not restricting their right to do so.58
ANZOA suggested reframing legal representation to require permission of the scheme, and
stipulating that legal proceedings should not have commenced prior to EDR unless there are
special circumstances.59 Similarly, the Financial Ombudsman Service (FOS) discourages legal
representation in practice but parties are free to use legal representation, in which case
internal legal resources are used.60 The QCA argued that while non-legalistic and nonadversarial approaches should be retained by schemes, the CDR Benchmarks should better
recognise that someone with legal qualifications might be able to assist some customers in
some situations.61
CCAAC is also aware of the increased operation of paid representatives in dispute
resolution, particularly ‘credit repair’ agents who charge significant fees for services, which
in many cases may be unnecessary. In supplementary information provided to this review,
the Energy and Water Ombudsman NSW (EWON) detailed a survey of credit repair agents,
to understand why customers engaged commercial advocates unnecessarily. In response to
queries regarding options for assistance available, EWON found credit agents typically
replied that the only alternative to payment for their service was to wait out a five-year
credit default listing.62 Such circumstances are disturbing, particularly when such agents
charge fees for services that ombudsman schemes provide free of charge. Even so, CCAAC
does not agree with a blanket ban on paid representation. CCAAC considers that each
scheme should allow parties to use a support person, which may in some cases include a
paid legal representative.
Virtual barriers
Apart from awareness of EDR schemes, customers need to be informed about other aspects
of dispute resolution. Inadequate or no information about complaint processes, what action
to undertake if a dispute is urgent (and there is significant detriment from delay in
resolution), the process of EDR, or on obtaining advice and support can also act as virtual
barriers.63 ANZOA suggested requiring participating organisations to provide information to
customers, once a reasonable time has passed for the organisation to resolve the complaint.64
Technological change means that some of the other ‘virtual barriers’ that customers may
encounter when trying to access EDR schemes can be overcome. For example, schemes
should be contactable outside of traditional office or call centre hours, and this should be
reflected in the CDR Benchmarks. In addition, Cameronralph Navigator suggests including
some new key practices regarding the acceptance of complaints from the customers who
have made ‘reasonable efforts’ to resolve the situation with the scheme member. It is also
important to note that it is appropriate for schemes to require complainants to at least
attempt to resolve their complaint internally prior to consulting an external dispute
58
59
60
61
62
63
64
COSL, p.4.
ANZOA, pp.6-7.
FOS, p.2.
QCA, p.2. For further discussion of this issue, refer to the discussion under Fairness - Procedural fairness.
Energy and Water Ombudsman NSW, Supplementary Submission, p.3.
See CCLC, p.5.
ANZOA, p.6.
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Review of the CDR Benchmarks
resolution scheme. However, unduly lengthy internal complaints handling schemes can
operate as a barrier to access to dispute resolution schemes.65
CCAAC considers that revised and updated key practices would assist EDR schemes to
minimise any ‘virtual barriers.’ This includes addressing with scheme members, any
difficulties that customers may have encountered in internal complaints handling
procedures. In addition, revised key practices could help schemes ensure that they have a
range of contact options for consumers.
Findings – Accessibility
•
The key practice of Awareness/Promotion should include an element encouraging a
scheme’s promotion efforts to focus on areas where a customer is likely to seek
information in the event of a dispute, such as the websites of consumer agencies and
advocacy services.
•
Additional key practices on Awareness/Promotion should be developed to assist
schemes to promote their schemes to customers with special needs, such as customers
with a disability or with a culturally and linguistically diverse background.
•
The key practice of Access should include an element to minimise any ‘virtual barriers’
to contacting a dispute resolution service; for example, that schemes can be contacted
online, and not limited to office openings or telephone contact hours.
•
Additional key practices on Legal Representation would assist schemes to determine
when paid representatives who act for customers in dispute resolution may be
appropriate.
•
A new key practice of Acceptance should recognise no-fee dispute resolution as an
essential component of accessibility for consumers, so that customers are not prevented
from accessing dispute resolution because of their financial situation.
65
–
This key practice should include information for schemes on ways of dealing with
potentially vexatious and frivolous complaints. This would support the
appropriate use of a scheme’s resources and minimise the risk of unreasonable
costs. In turn, this would support the sustainability of no-cost dispute resolution.
–
Dispute resolution services should outline how they will manage delays and
include possible ways to ‘triage’ complaints for action. Complaints could be
referred: to an alternative avenue for justice, or to a regulator; for liaison where
there may be an overlap in jurisdiction; or for acceptance as a case.
Cameronralph Navigator, p.7. One issue that is not easily addressed is the inefficacy of dispute resolution
without a willingness of industry members to participate in schemes; for example, the building industry. See
submission from Building Compliance Reform Association.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Independence
Underlying principle: The decision-making process and administration of the
scheme are independent from scheme members.
Purpose: To ensure that the processes and decisions of the scheme are objective
and unbiased and are seen to be objective and unbiased.
Systemic issues are particularly problematic for EDR schemes. Even if a scheme attempts to
resolve a systemic issue, it is not clear whether the resolution of the issue was fair unless
there are transparency and oversight mechanisms.66 However, most submissions first raised
concern about a scheme’s profit objective status.
Most submissions addressed the Independence Benchmark. ANZOA suggested that the
independence principle statement be reworded. Cameronralph Navigator argued that the
statement of principle and the statement of purpose could both be broadened.67 The CCLC
reported consumer concern that EDR is not independent, arguing that the CDR Benchmarks
should be formulated to ensure that EDR is also seen to be independent.68
Not-for-profit status
Many submissions argued that the CDR Benchmarks should require schemes to be not-forprofit.69 CHOICE argued that for-profit schemes create perverse incentives that encourage
schemes to avoid complex disputes, because cost minimisation is likely to be prioritised at
the expense of correcting cases of consumer harm. CHOICE therefore considered that cost
minimisation is in conflict with the objectives and the purpose of CDR dispute resolution
schemes.70 Similarly, Baljurda Comprehensive Consulting suggested that the CDR
Benchmarks include a point stating that the object of the scheme should be to operate for a
public purpose and on a not-for-profit basis.71 While there were mixed views expressed in
New Zealand about for-profit status, there is no clear-cut evidence that for-profit status in
itself hinders effective dispute resolution.
CCAAC remains to be convinced that for-profit status in itself would necessarily hinder
effective dispute resolution, as it did not receive any compelling evidence that this would be
the case. During consultation, CCAAC became aware of only one submission originating
from a for-profit dispute resolution scheme, based in New Zealand. Even so, CCAAC is
mindful of some perverse incentives that may arise from a for-profit scheme. Disputes that
are more complex or require more time may be avoided or treated superficially in order to
minimise costs. However, CCAAC considers that Accountability and Effectiveness key
practices may address concerns that could arise in relation to for-profit schemes. For
example, Accountability key practices encourage schemes to provide written reports of
determinations, and publish a detailed and informative annual report containing specific
66
67
68
69
70
71
CCLC, p.11.
ANZOA suggested that the statement be reworded to ‘The decision-making process and administration of
the office must be independent from participating organisations.’ ANZOA, p.7; Cameronralph Navigator,
p.7.
CCLC, p.8.
QCA, p.1; ANZOA, p.8; CCLC, p.8; Australian Communications Consumer Action Network, p.1. In the
Credit Ombudsman Service’s view, requirement that any EDR scheme not return a profit to its members is a
‘key omission’ from the existing CDR Benchmarks. They proposed that this be a new key practice (see COSL,
p.5).
CHOICE, pp.8-9. This issue is discussed in more detail in Accountability – Transparency and reasons for
decision and in Effectiveness – Systemic problems.
Baljurda Comprehensive Consulting, p.6.
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Review of the CDR Benchmarks
statistical and other data about the performance of the scheme. In addition, Effectiveness key
practices include supporting compliance.
Conflicts of interest, bias and transparency
A number of stakeholders pointed to potential conflicts of interest, and ways to minimise
bias and enhance transparency. A confidential submission raised a concern about EDR
scheme staff assisting complainants to draft their complaint. The ‘separation of power’
between staff assisting complainants and those making the decisions should alleviate this
concern. In any case, greater accessibility should curtail the need for scheme staff to be
involved in complaint drafting on behalf of customers.72 Other stakeholders raised concerns
about other possible conflicts of interest, such as regulatory backgrounds of decision-makers,
or the advocacy role assumed by some dispute resolution services.
It is CCAAC’s view that a regulatory background may enhance, rather than detract from, an
ombudsman’s ability to make a fair decision, and an advocacy role complements the
decision-making role of an ombudsman. CCAAC is not inclined to support key practices that
prevent former regulators from holding positions in a dispute resolution scheme, nor that
greater accessibility would reduce the need for scheme staff to be involved in complaint
drafting on behalf of customers. However, CCAAC is of the view that additional key
practices to assist schemes to ensure conflicts of interest and bias are transparently managed,
particularly where schemes may have multiple functions/roles that can conflict, may be
helpful.
Governance
Governance should focus on oversight of policy development, to ensure stakeholders in EDR
processes are consulted and accommodated. An overseeing body should be comprised of
independent members. This should include ensuring EDR has a balance of stakeholders from
member organisations, relevant regulators, consumer bodies, legal expertise and other
dispute resolution experts. CALC was firmly of the view that EDR schemes should not be
answerable to or selected by scheme members.73 In addition, schemes should have sufficient
powers to deal with systemic issues and provide information on statistics of complaints
handling performance in the sector.74
CCAAC notes some of the tensions that can be involved in determining the governance
arrangements of schemes. CCAAC considers that the existing ‘balance’ of stakeholders,
detailed in the Key Practices, adequately address concerns that scheme members may wield
disproportional influence in governance arrangements. Additional key practices would assist
schemes to ensure an appropriate balance of stakeholders. CCAAC is of the view that some
of the key practices detailed in other benchmarks, such as Effectiveness, could also play a
part in addressing governance concerns.
Scheme competition
Stakeholders consider it undesirable to have more than one dispute resolution service
operating in a single industry, arguing that this kind of ‘competition’ does not operate in the
interests of consumers. In a competitive environment, EDR schemes would vie for business
of industry members, reducing fees and in turn lowering resources available for
complainants to EDR schemes. Therefore, a competitive environment provides no incentive
72
73
74
Refer to the section on Accessibility.
CALC, p.7.
CHOICE, p.10.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
for schemes to provide better service for consumers.75 Conversely, the COS argued that
where a choice of EDR exists, there is some pressure on schemes to run efficiently and strive
to improve service levels, and that the diversity of approaches to different issues can only
produce better outcomes.76 Such an assertion is difficult to quantify.
In New Zealand, it is not clear that scheme competition in itself is a problem, provided
schemes are operating well and delivering outcomes for consumers. However, it may be
useful to have a mechanism for addressing potential inconsistencies that may arise between
rules of different schemes in a sector. In this regard, recent changes to the Financial Service
Providers (Registration and Dispute Resolution) Act 2008 allow regulations to be made which
will enable better alignment of scheme rules where appropriate, to ensure the sector is
operating well to deliver outcomes for consumers.
Following targeted stakeholder consultations, CCAAC appreciates some stakeholders
concerns about scheme competition. CCAAC is of the view that scheme competition is not in
itself problematic, provided schemes are operating well, and delivering outcomes for
customers and industry.
Findings – Independence
•
New and improved key practices across the CDR Benchmarks should be developed to
address concerns in relation to for-profit schemes. CCAAC notes some of the risks and
perverse incentives that may arise from for-profit schemes.
•
Additional key practices for the Overseeing entity would be useful to assist schemes to
ensure an appropriate balance of stakeholders is involved in scheme governance.
•
Additional key practices on the Decision-maker, Staff and Overseeing Entity would
assist schemes to ensure that any actual or perceived conflicts of interest and bias are
managed in a transparent way.
75
76
ANZOA, p.4; CALC, p.7.
COSL, p.5.
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Review of the CDR Benchmarks
Fairness
Underlying principle: The scheme produces decisions which are fair and seen to
be fair by observing the principles of procedural fairness, by making decisions on
the information before it and by having specific criteria upon which its decisions
are based.
Purpose: To ensure that the decisions of the scheme are fair and are seen to be
fair.
As mentioned earlier in this report, Fairness was an area on which many stakeholders
provided feedback. The ANZOA suggested that the Fairness principle statement be
reworded, and Cameronralph Navigator considered that both the statement of principle and
the statement of purpose should be broadened.77 The ICA also suggested rewriting the key
principle, and suggested that key practices on what is fair and reasonable in decision-making
be clarified, as it can be interpreted in more than one way, which is not necessarily equitable
to all parties in all instances. In the ICA’s view, schemes should consider determinations on
relevant industry codes of practice and the law versus what is fair and reasonable (having
regard to good industry practice).78
More generally, the ICA suggested that consumer financial hardship could be acknowledged
in the CDR Benchmarks. Moreover, both the ICA and the ABA argued that financial
hardship requires a more consistent approach across industry sectors.79
Consistency and review of decisions
CALC’s submission argued that the ability to decide disputes should take into account not
only the law, but also what is fair and reasonable in the circumstances and good industry
practice.80 The CCLC supported the idea that EDR schemes be required to demonstrate that
the principles of fairness and good industry practice are applied in decision-making.81
Further, the CCLC submitted that schemes should be required to have procedures to ensure
internal consistency.82 Cameronralph Navigator noted that complaints handling staff should
have an appropriate range of tools and resources to promote consistency and quality.83
Some schemes grapple with auditing their decision-making, including fairness of processes
and accuracy of interpretation and application of good industry practice and law.84 The
ADMA notes that there is a need for flexibility in the application of the CDR Benchmarks, as
industries and companies consider resourcing commensurate with their size and
community.85
77
78
79
80
81
82
83
84
85
ANZOA, p.8; Cameronralph Navigator, p.9.
ICA, p.3.
ICA, p.4; ABA, p.5.
CALC, p.5.
CCLC, p.9.
CCLC, p.10.
Cameronralph Navigator, p.9.
CCLC, p.10.
ADMA, p.2; this also links with Independence.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Smaller scheme members may be more affected financially by decisions and seek review of
decisions. In addition, overall confidence in a scheme can be undermined if discontented
members challenge scheme decisions regularly. The CCLC stated that the CDR Benchmarks
should require schemes to have systems in place to regularly measure fairness.86
CCAAC is of the view that improved key practices would assist schemes to review their
decision-making processes, which in turn is likely to improve consistency of decisions. For
example, practices encouraging schemes to contact parties involved in the dispute resolution
after a determination to gather comments on the process and the effectiveness of decisions
could be used to inform continuous improvement practices.
Enforceability
The enforceability of schemes decisions and determinations remains a major concern, as
decisions made by EDR schemes are non-binding. ANZOA argued that wording should be
amended to ensure that ‘A final determination of the decision maker that is not a
recommendation is binding on the participating organisation if the complainant accepts the
decision.87
Because the CDR Benchmarks are largely external to a regulatory framework, schemes do
not make binding decisions.88 CHOICE noted that addressing deliberate non-compliance
with scheme determinations justifies more developed guidelines.89 In addition, problems
with enforceability arise when a scheme’s members are insolvent, no longer trading or
otherwise unable to provide redress.90 Refer to the discussion under Effectiveness –
Insolvency.
CCAAC is concerned that the lack of enforceability of EDR decisions can undermine the
usefulness of the dispute resolution process, and may in the long-term have the potential to
damage the reputation of dispute resolution more broadly. Therefore, CCAAC considers that
reviews of decision-making processes as part of an independent review could encourage
schemes to consider ways to ensure decisions are enforced. The Accountability and
Efficiency benchmarks play an important role here as well and recommended changes to
these key practices may affect a scheme’s ability to enforce decisions. Enhanced practices
providing schemes with advice on reporting non-compliant decisions, highlighting systemic
problems and material that should be considered during an independent review, will be of
assistance to schemes.
Procedural fairness
The COSL noted that the Fairness principle and purpose are principally focused on the
decisions of a scheme, but that procedural fairness should also be incorporated into the
benchmark.91 Cameronralph Navigator supported this view, stating that procedural fairness
should recognise that EDR is not a court of law and the necessity of quick informal processes
to achieve results. Key practices should therefore note the advantages for both parties of a
quick resolution.92
86
87
88
89
90
91
92
CCLC, p.10; see also Accountability – Member and customer feedback.
ANZOA, pp.8,11.
ACA, p.2.
CHOICE, p.10-11.
CHOICE, p.11.
COSL, p.7-8. The Insurance Council of Australia made a similar point in their submission at p.3.
Cameronralph Navigator, pp.7-8.
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Review of the CDR Benchmarks
The CCLC argued that one element of procedural fairness is that a preliminary view or
assessment of the dispute is provided to both parties at the same time, and expressed dismay
at the practice of one EDR scheme providing their preliminary view to the scheme member
for comment prior to providing it to the consumer.93 Similarly, CALC argues that the CDR
Benchmarks should promote fairness in all EDR processes, not just decision-making.
Fairness should be broadened beyond making fair decisions to address power imbalances
between complainants and industry.94 Scheme staff should provide information and
assistance where the complainant is in a position of disadvantage relative to the scheme
member; industry often has access to legal advice and representation, so customers should
have this right too.95 Some stakeholders have proposed that guidance should require both
scheme members and complainants to provide information relevant to the complaint.96
ANZOA noted the importance of the participating organisation informing affected
customers about the ADR mechanisms available.97 However, as the CDR Benchmarks are
primarily directed at dispute resolution schemes rather than scheme members, CCAAC is of
the view that dispute resolution schemes themselves have primary responsibility for
ensuring that information about the scheme is detailed on relevant websites.
Communication
Communication with stakeholders is a vital practice in any organisation and a crucial
element of procedural fairness. The CCLC noted that customers not only need to be
informed of EDR, but the EDR process itself. In addition, customers should receive
information about obtaining advice and support through the process. The CCLC argued that
schemes should be encouraged to publish and otherwise disseminate appropriate
information to guide users on how disputes will be handled. Moreover, the CCLC advocated
the publication of a bulletin or circular at least quarterly to cover updates, news and the EDR
approach to a common complaint. It could include information on particular issues, and the
practices and approaches employed to address those issues, as a way of informing both
complainants and scheme members.98
In relation to decisions, the ICA proposed that there be a requirement for EDR decisions to
be brief and concise, and include a succinct explanation of legal principles applied, to
enhance procedural fairness.99 Finally, regarding confidentiality and disclosure, ANZOA
recommends that the requirement that parties agree not to disclose information be
removed.100
CCAAC notes that Fairness often links with Accountability, as transparency and oversight
are aspects of both values, and communication links with reporting obligations. CCAAC
considers that improved key practices would assist EDR schemes to further develop other
elements of their procedural fairness, including the provision of information to both
customers and scheme members and ongoing communication. Appropriate communication
about schemes processes and decisions are essential elements of procedural fairness.
93
94
95
96
97
98
CCLC, p.9.
CALC, pp.4-5.
Cameronralph Navigator, p.8; CCLC, pp.6-7.
FPA, p.2; CALC, p.5.
ANZOA, p.5.
CCLC, pp.10-11. Further information on communication is detailed in the section on Accountability –
Reporting.
99 ICA, p.3.
100 ANZOA, p.9; Baljurda Comprehensive Consulting agreed with this recommendation, Baljurda
Comprehensive Consulting, p.8.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Findings – Fairness
•
The key practice of procedural fairness should incorporate additional elements of
procedural fairness, including provision of information to both customers and scheme
members, and ongoing communication by schemes.
•
A new key practice should be included on Review of decision-making processes, to
encourage schemes to consider ways to ensure decisions are enforced. Consistency of
decision-making is also likely to be improved by this addition.
•
Key practices should be developed in relation to other aspects of procedural fairness,
including the timeliness of the provision of information to complainants and scheme
members, and ongoing communication on the progress of the investigation and
decision.
•
Enhanced key practices relating to other benchmarks would assist in addressing
enforceability.
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Review of the CDR Benchmarks
Accountability
Underlying principle: The scheme publicly accounts for its operations by
publishing its determinations and information about complaints and
highlighting any systemic industry problems
Purpose: To ensure public confidence in the scheme and allow assessment and
improvement of its performance and that of scheme members.
The Accountability Benchmark was one of the CDR Benchmarks receiving the most
comment from stakeholders. ADMA considers that accountability could be bolstered by
measures to encourage and incentivise best practice.101 The COSL argued that this
benchmark should also include ‘outcomes which do not involve decisions or
determinations.’102
Transparency and reasons for decision
Most of the submissions recommended transparency and reasons for a decision be enhanced
as part of the Fairness and Accountability Benchmarks and their key practices. There is
currently little guidance from issued determinations on how complaints are handled and
decisions are made within EDR schemes.103
Moreover, the CCLC submitted that the CDR Benchmarks should include a requirement that
findings, case assessments and similar evidence of decision-making are published on the
relevant EDR scheme’s website to ensure the parties have some direction on likely EDR
outcomes.104 Dispute resolution consultants agreed, suggesting that not only should the
Accountability statement of principle be broadened, but that the key practices should require
the publication of reasons for decisions (on an anonymous basis) of all determinations.
Practice notes or bulletins in relation to common complaint scenarios could be published
along with information about complaints as they concern scheme members.105
Some of these concerns around transparency and reasons for decision have already been
raised elsewhere in this report, under Fairness.106 Again, CCAAC considers that these issues
could be addressed by improved key practices.
Addressing non-compliance
As mentioned under Fairness, problems with enforceability arise where scheme members
are insolvent, no longer trading or otherwise unable to provide redress. CHOICE suggests
that compensation arrangements should be established, or it should be a requirement of
scheme membership that members hold a security deposit to satisfy claims if they become
insolvent. In addition, schemes should be required to address the issue of funding in
constitution or other establishment documents, and have a current business plan that
addresses contingencies and alternative sources of funding for the scheme.107
101
102
103
104
105
106
107
ADMA, p.2.
COSL, p.8.
Baljurda Comprehensive Consulting, p.10; CALC, p.6; CCLC, p.10.
CCLC, p.11.
Cameronralph Navigator, p.8; Baljurda Comprehensive Consulting, p.10.
See Consistency and Review of Decisions, p.19, and Procedural Fairness, pp.20-12 and Communication, p.21.
CHOICE, pp.10-13.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
CHOICE stated that addressing deliberate non-compliance with scheme determinations
justifies more developed guidelines. While CHOICE emphasised that flexibility should be
maintained in the CDR Benchmarks, it also noted other options such as tying compliance to
other regulatory systems. For example, non-compliance with determinations by an EDR
scheme may constitute misleading or deceptive conduct, if an industry member indicated
that as members of an EDR scheme they will comply with its decisions. In this regard,
CHOICE supports requiring scheme members to make a clear public statement that they will
comply with scheme determinations.108
As described under Fairness, the lack of enforceability of decisions has the potential to
weaken dispute resolution as an alternative route for access to justice. CCAAC reiterates its
view in relation to Fairness: revised and enhanced key practices could encourage schemes to
consider ways to ensure decisions are enforced, and further, to provide redress where
scheme members are deliberately non-compliant.
Member and customer feedback
The CCLC argued that the CDR Benchmarks should require schemes to have systems in
place to regularly measure user satisfaction, fairness and efficiency in dispute resolution
process and decision making quality. Where possible, these mechanisms should involve
feedback from outside the scheme itself.109
In addition, the National Financial Services Federation (NFSF) argues that EDR schemes
should allow members of the schemes to provide effective feedback and discussion,
alongside other stakeholders.110 Importantly, the ICA suggests that the Accountability
Benchmark require schemes to analyse experience of complaint management to inform
ongoing EDR scheme improvements.111
Feedback should be invited regularly, and member feedback should be commented on and
addressed in reports and provide measures of efficiency and accountability. The NFSF
suggests that a reference to ASIC RG 139 could be used as a basis for this reporting
requirement.112 However, it must be emphasised that EDR schemes not in the financial sector
may require guidance that is more detailed.113
CCAAC recognises the importance of stakeholder feedback, and is mindful of the benefit
that feedback from both customers and scheme members can bring to dispute resolution in a
cycle of continuous improvement. CCAAC also appreciates that not all stakeholders will
provide feedback without prompting. Therefore, CCAAC considers that revised key
practices should encourage schemes to accept and respond appropriately to feedback
received, and to elicit feedback from customers and scheme members. The means used to
gather feedback on a dispute resolution scheme could be used as a basis for regular public
reporting.
108
109
110
111
112
CHOICE, p.12.
CCLC, p.13.
NFSF, p.2.
ICA, p.4.
NFSF, p.4. ASIC RG 139 covers implementation processes and guidance for dispute resolution schemes in
the finance sector.
113 NFSF, p.4. The NFSF also suggests that providers of EDR schemes may need separate guidance to cover the
CDR Benchmarks and how to satisfy accountability.
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Review of the CDR Benchmarks
Reporting
Most of the submissions received advocated enhanced reporting requirements, consistent
with the timeframes expected for corporate financial reporting. Reporting is critical to
determine whether there are systemic problems in the industry, and can identify industry
members who are performing poorly at resolving disputes.114 Other publications are
necessary for accountability, as without a sufficient body of published material, it may be
difficult to make settlement decisions.115
CHOICE argued that enhanced reporting requirements should feature in the Accountability
Benchmark.116 Annual reports of EDR schemes should include details of numbers and types
of complaints against particular industry members, and identified systemic issues.117 In
addition, CHOICE argues that the CDR Benchmarks should address the issue of schemes
reporting on financial matters in their annual reports to facilitate transparency and
accountability in relation to funding.118
Reporting could be improved by requiring reporting of performance by EDR schemes
against objectives, and reporting stakeholder feedback.119 Moreover, the ICA suggested that
the CDR Benchmarks include guidance on best practice scheme reporting to all stakeholders,
to reflect relationships and contracts that underpin the scheme, and best captures the
performance experience of the scheme.120 Key practices could stipulate to report against each
benchmark in annual reports.121
As described previously, the CCLC considered that the practices should specify that a
bulletin or circular be published at least quarterly that covers updates and news, and the
scheme’s approach to a common complaint.122 The publications could be directed towards
scheme members and consumers, rather than the more official annual report that is required
under regulation.
CCAAC considers that there would be considerable benefit in enhanced key practices with
examples for EDR schemes to assist them to deliver best practice reporting. Feedback
received from members and customers could assist schemes in their reporting.
Findings – Accountability
•
The key practice on Determinations should include an additional element to encourage
schemes to provide reasons for decision. Additionally, schemes should be encouraged
to publish guidance for industry and consumers relating to the application of the law
and how determinations will be made for different types of complaints. This would
enhance scheme transparency and accountability.
•
Schemes could consider the inclusion of information to assist in developing appropriate
enforcement mechanisms to ensure decisions are enforced, and to provide redress
where scheme members are deliberately non-compliant.
114
115
116
117
118
119
120
121
122
CCLC, 11.
Cameronralph Navigator, p.8.
CHOICE, p.9.
CCLC, p.11.
CHOICE, p.12.
NFSF, pp.2-4.
ICA, p.4.
NFSF, p.4.
CCLC, p.11.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
•
A new key practice on Responding to feedback could be included for schemes to accept
and respond appropriately to feedback received, and to elicit feedback from customers
and scheme members.
–
•
Feedback on a dispute resolution scheme from complainants and scheme
members could be used for continuous improvement and as a basis for public
reporting.
Additional key practices on Reporting should be developed, including resources and
examples to assist schemes to deliver best practice reporting.
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Review of the CDR Benchmarks
Efficiency
Underlying principle: The scheme operates efficiently by keeping track of
complaints, ensuring complaints are dealt with by the appropriate process or
forum and regularly reviewing its performance.
Purpose: To give customers and scheme members confidence in the scheme and
to ensure the scheme provides value for its funding.
There appears to be a lack of clarity in some submissions between the Efficiency and the
Effectiveness Benchmarks. Although there can be significant overlap, Efficiency relates to
value for money, whereas Effectiveness is whether the scheme achieves results.
A number of stakeholders suggested general changes. Cameronralph Navigator considered
that the Efficiency statement of principle should be broadened.123 ADMA suggested that the
efficiency of dispute resolution schemes would be boosted by the establishment and
maintenance of a register of such schemes. ADMA provided the example of the 2012-13
review of the Australian Group Buying Code of Practice, in which the CDR Benchmarks
were referenced. The review resulted in the Code becoming more effective in complaints
handling contact points, defined response times and defined resolution timeframes.124 Such a
register of dispute resolution schemes would be regularly updated, to be of use to other
schemes, customers and government agencies.
Out-of-scope, unfounded or previously reported claims
The NFSF noted that efficiency is about value for funding, so complaints should only be
considered when they are in the scheme’s terms of reference. It indicated that feedback from
its members indicates that on occasion complaints appear to be outside a scheme’s terms of
reference, yet charges are still applied to members.125 Similarly, another stakeholder thought
the CDR Benchmarks should require that complaints only be considered when they are
within the scheme’s terms of reference, and when the scheme is the most appropriate forum
for the complaint to be considered. They provided the example of the FOS, stating that
because it has authority to ‘assist complainants’, it regularly structures complaints to fall
within its purview.126
The FPA contended that vexatious claims could progress through the EDR system with
significant impacts on providers, the EDR scheme and other complainants. It provided the
example where some claims found by EDR schemes have had no basis for complaint, so a
scheme may recommend that the complaint does not proceed. However, EDR findings are
only binding on the members. As such, the complainant can request that it proceed to
determination, where it can be denied again, as the complaint is without a foundation. Such
situations have little impact on the complainant but divert resources from customers with
valid EDR claims. It can also have adverse consequences for the provider, including personal
indemnity insurance premiums (even though the scheme found the claim was unfounded).
The FPA provided written examples and testimonies, and suggested addressing vexatious
claims by improving the CDR Benchmarks and their implementation by regulators and
ultimately EDR schemes.127
123
124
125
126
127
Cameronralph Navigator, p.9.
ADMA, p.3.
NFSF, p.3.
Confidential Submission 1; see also the Accessibility section.
FPA, pp.1-2.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
CCAAC is unclear whether out-of-scope, unfounded or previously reported claims are a
significant issue for most schemes. However, CCAAC recognises that resources can be
wasted through EDR schemes duplicating the efforts of bodies who have already handled a
complaint. CCAAC agrees with the ICA, that efficiency could be improved with practices
and procedures on how schemes can avoid or manage an overlap of jurisdiction with
another EDR scheme or tribunal.128
Timeliness
CHOICE argues that some EDR schemes are inefficient and ineffective because of substantial
delays in complaint resolution, adding to existing delays to exhaust the member’s internal
dispute resolution before taking it to EDR. CHOICE suggests that the practices require time
limits and complaints tracking.129 The Telecommunications Industry Ombudsman (TIO)
notes that timeliness is not only an important part of efficiency, but also crucial to be able to
effectively combat systemic issues.130 The NFSF notes that there is sometimes inconsistency
in the scheme’s response times.131 Therefore, key practices should include tracking and
considering complaints within a reasonable timeframe. The ICA suggests the CDR
Benchmarks provide direction for service level agreements on timelines for decisions by EDR
schemes.132
In CCAAC’s opinion, timeliness is a vital part of dispute resolution. This does not mean that
all disputes will be resolved quickly; some disputes require considerable investigation and
other processes before decisions are taken. In addition, timeliness can also refer to the
referral of issues to regulators, and the communication delivered to complainants and
scheme members. CCAAC is acutely aware of the need for schemes to be adequately
resourced to enable timely responses to complaints. CCAAC is of the view that improved
key practices, including indicative timelines for the resolution of disputes, would assist EDR
schemes to consider and act upon the variety of aspects to timeliness.
Professionalism
The skills and knowledge of EDR scheme staff is an essential element of efficiency. Both
ANZOA and Cameronralph Navigator stress the importance of appropriately qualified staff;
recruitment and training programs should ensure staff members have a good knowledge of
law, industry practices and consumer issues relevant to a scheme’s jurisdiction. In addition,
complaints handling staff should have an appropriate range of training, tools and resources
to allow them to undertake their functions effectively, to promote consistency and quality,
and for continuing development.133
The quality of complaints handling frequently reflects professionalism, so Cameronralph
Navigator is of the view that the Efficiency Benchmark should be broadened to encompass
aspects of internal management.134 ANZOA recommends modernising and improving the
principle statement, as well as ensuring that the practices stipulate keeping track of
complaints, ensuring complaints are dealt with appropriately, and regular performance
128
129
130
131
132
133
134
ICA, p.4; see also Accessibility, scheme scope, and Independence, scheme competition.
CHOICE, p.10.
TIO, p.3.
NFSF, p.3.
ICA, p.4.
ANZOA, p.11; Cameronralph Navigator, p.9; Baljurda Comprehensive Consulting, p.11.
Cameronralph Navigator, p.9.
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Review of the CDR Benchmarks
review.135 The linked matters of reporting and periodic independent review were already
raised under Accountability.
CALC suggests that schemes should be required to consider their performance, what drives
demand for their scheme, and how that demand could be reduced, particularly in relation to
systemic issues.136 The CCAAC notes that key performance indicators could be used by a
scheme to assess its efficiency. Further information on systemic issues is provided in the next
section on the Effectiveness Benchmark.
CCAAC considers that enhanced Accountability key practices to safeguard the
professionalism of scheme staff would be helpful.
Findings – Efficiency
•
The key practice of Compliance should include a new element detailing methods to
mandate or improve compliance with decisions, and ensure redress for customers
when a scheme member is non-compliant with a scheme’s decision or recommendation.
•
A new key practice of Timeliness would assist schemes to consider and act upon the
variety of aspects to the timeliness of processes. This applies to the timeliness of
acknowledging and responding to an initial complaint, time taken to investigate a
complaint, and time taken to make a decision.
•
A new key practice on Staff would assist schemes to ensure the professionalism of
scheme staff members, including appropriate qualifications and experience.
•
Resources can be wasted through schemes duplicating the efforts of bodies who have
already handled a complaint. Appropriate Process or Forum should include key
practices to assist schemes to consider how they can best handle an overlap of
jurisdiction with another scheme or tribunal.
135 ANZOA, p.10.
136 CALC, p.6.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Effectiveness
Underlying principle: The scheme is effective by having appropriate and
comprehensive terms of reference and periodic independent reviews of its
performance.
Purpose: To promote customer confidence in the scheme and ensure that the
scheme fulfils its role.
Evaluating outcomes is difficult without clearly defined objectives. The NFSF argues that it is
impossible to evaluate effectiveness when there is no ‘expectation’ established. It suggests
independent review as important part of the Effectiveness Benchmark.137 CCAAC has
considered ways in which the objectives and expectations of schemes could be clearly
articulated in order to assist evaluation, including the evaluation of effectiveness. The
effectiveness of dispute resolution services is likely to be more readily evaluated through
enhancement to other CDR Benchmarks practices such as specified communication,
transparent decision-making, improved reporting, and timeliness.
The FOS note that the effectiveness of EDR and the CDR Benchmarks more generally is
affected by factors such as the regulatory and legal framework for financial services, and the
broad social and community infrastructure that supports EDR arrangements. The FOS notes
the example of financial counsellors, community legal centres and other community
organisations, particularly those working with people experiencing disadvantage, may be
vulnerable, or are otherwise unable to access schemes.138 Similarly, one consultant with
experience in reviewing EDR schemes noted that strong member liaison arrangements that
engender understanding of complainant issues provides optimal outcomes, and the
effectiveness of this relationship should also be included in the CDR Benchmarks.139 Schemes
could assume a role in the prevention of issues that may lead to disputes.
In addition, the CDR Benchmarks could better reflect ancillary dispute resolutions that are
not part of the formalised EDR processes. The CCLC is of the view that schemes should be
able to demonstrate quality and effectiveness without compromising quick and informal
resolution.140 The TIO, for example, has increased its scope in order to assist customers trying
to resolve matters privately.141 The section on Accessibility – Referral to schemes discusses
CCAAC’s proposal to address such issues, such as the ‘triage’ system of handling
complaints.
Compliance - binding decisions and ensuring redress
A number of stakeholders noted that a key factor of effectiveness is whether determinations
are binding on the scheme member. The Airline Consumer Advocate notes that while the
CDR Benchmarks underpin its work, because it does not fit within a regulatory framework,
the scheme is unable to make binding decisions.142
One major circumstance in which redress is not achieved is when a scheme member is
insolvent. Stakeholders noted that effectiveness of EDR as a dispute resolution mechanism
could be compromised by insolvency, where redress is granted by the scheme but frustrated
137
138
139
140
141
NFSF, p.3.
FOS, p.3.
Cameronralph Navigator, p.9.
CCLC, p.13.
TIO, p.4. The CDR Benchmarks could therefore refer to representation in all dispute resolution processes and
not just determinations and decisions. QCA, p.2. Refer to discussion on Accessibility - Representation.
142 ACA, p.2.
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Review of the CDR Benchmarks
by the insolvency.143 The FOS noted that possible solutions to under-compensation are
currently under development, and expressed a willingness to work collaboratively to
address the issue.144 The ABA was concerned that there are currently no published measures
aimed at resolving some of the unfortunate outcomes of dispute resolution, despite
consultation with ASIC.145
In addition, there may be other reasons for non-compliance.146 ANZOA proposes that the
CDR Benchmarks should set a standard for EDR schemes and members, by requiring scheme
members to be bound by a final determination that is not a recommendation, providing the
complainant accepts the decision. ANZOA also proposes broadening ‘final determinations’
to include recommendations, and change ‘determinations’ to ‘decisions’.147
CCAAC considers that there would be merit in including key practices encouraging
transparency, such as the publication of resolutions and determinations. Such methods
would assist EDR schemes to improve participating organisations’ compliance with
decisions, and ensure redress for customers when a scheme member is non-compliant with a
scheme’s decision or recommendation.
Systemic problems
Systemic issues can be particularly problematic for EDR schemes. In targeted consultations,
ANZOA described how schemes frequently deal with similar issues. These can often indicate
that there may be a regulatory issue requiring particular attention. The QCA suggested that
the CDR Benchmarks include more ways schemes might work to achieve reductions in
systemic problems.148
CALC considered that the CDR Benchmarks should provide instructions on handling
systemic problems.149 ANZOA considered that the CDR Benchmarks needed to recognise
that systemic issues might arise from just one complaint.150 For illustrative purposes, an
example may be that while investigating a complaint an EDR scheme might discover other
customers who have experienced the same issue, but have not taken their dispute to a
dispute resolution scheme.
The CCLC notes that even if an EDR scheme attempts to resolve a systemic issue, a lack of
transparency or oversight on particular issues means it is not clear whether an outcome or
action was fair.151 ANZOA suggests that the CDR Benchmarks provide for investigation of
systemic issues, as well as referral elsewhere. More specifically, ANZOA suggests amending
the CDR Benchmarks to refer systemic problems to an appropriate regulator for action if
required.152
In New Zealand, financial service dispute resolution schemes are required to communicate
to the relevant licensing authority (the Financial Markets Authority) when there are a series
of material complaints about a provider or a class of providers. Where there is a series of
143
144
145
146
147
148
149
CHOICE, pp.10-12; FOS, p.2.
FOS, p.3.
ABA, p.3.
For example, see the sections on Fairness – Enforceability and Accountability – Addressing non-compliance.
ANZOA, pp.8, 11.
QCA, p.2.
CALC, p.6. One way of handling systemic problems is through the ‘triage’ suggestion mentioned under
Accessibility – Referral to Schemes.
150 ANZOA, p.10.
151 CCLC, p.11.
152 ANZOA, p.10.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
material complaints about creditors or classes of creditors, the schemes must communicate
this to the Commerce Commission.
CCAAC considers that there is a role for EDR schemes to alert regulators and policy makers
to systemic issues based on the cases brought to dispute resolution. CCAAC recommends
additional key practices to assist schemes to determine when to bring issues to the attention
of relevant bodies, such as industry associations, regulators or policymakers, be developed.
Periodic independent review
Periodic independent review would provide a valuable opportunity to assess EDR
performance. The CCLC suggests that independent reviews of EDR schemes should occur at
a minimum of every five years after the first review.153 As schemes mature, governance
should focus on oversight of policy development and ensure that stakeholders in the EDR
process are consulted and accommodated.
CCAAC recognises the benefits of periodic review undertaken by an independent reviewer,
as it is likely to deliver insights into the scheme not appreciated by someone familiar with
the day-to-day operations of the scheme. CCAAC considers that revised and enhanced key
practices should encourage periodic independent reviews of schemes. Enhanced reporting
requirements would assist reviewers.
Existing guidance
The QCA reported that the existing implementation guidance documents issued by some
schemes appear beneficial for all stakeholders. The QCA is of the view that schemes should
consider issuing their own guidance or utilising existing relevant guidance. On issues that
are common to all or most schemes, such as systemic issues, generic templates would be
useful.154 There may already be sufficient guidance from other relevant standards and
guidelines, when applied in conjunction with the CDR Benchmarks.
However, most in the financial sector considered that implementation guidance was not
necessary for the sector, as ASIC RG 139 fulfils this role for financial services EDR schemes,
providers and consumers. Additional prescriptive guidance would duplicate the ASIC
guidance, and possibly lead to confusion.155 Moreover, additional prescriptive guidance
could affect the authority, independence and management flexibility of the Ombudsman.
That said, the New Zealand Banking Ombudsman Service supports developing additional
implementation guidance, but also argued that it should not be prescriptive.156
FPA noted that ASIC RG 139, which provides for approval and oversight of EDR schemes,
including detailed guidelines for the application of the CDR Benchmarks. In addition, the
General Insurance Code of Practices also sets out a self-regulatory framework for Code
signatories. The FOS monitors code compliance and so the FPA does not see a need for
additional guidance.157 The ICA also argued that if the CDR Benchmarks Principles do not
alter considerably, then additional assistance and guidance is not required, as EDR schemes
have terms of reference and review processes that should assist the particular scheme.158
153
154
155
156
157
158
CCLC, p.12.
QCA, p.2.
FPA, p.3.
Banking Ombudsman Service, p.2.
FOS, pp.2-3; FPA, p.3.
ICA, p.4.
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Review of the CDR Benchmarks
CCAAC considers that additional high-level key practices could boost the effectiveness of
the existing key practices in all of the CDR Benchmarks.
Findings – Effectiveness
•
The key practice related to Systemic Problems should include a new element
encouraging schemes to alert regulators and policy makers to systemic issues based on
the cases brought to dispute resolution.
•
The key practice of Periodic independent review should include a new element
encouraging independent reviews at set periods.
•
For finance-related dispute resolution schemes, guidance on the implementation of the
CDR Benchmarks is not necessary as ASIC regulatory guidance is already in use.
•
Revisions and additions to key practices for other benchmarks would assist
stakeholders to address issues of effectiveness - for example, considering special needs,
reviewing decisions, enhancing communication and reporting, and improving
timeliness.
Page 33
CONCLUSION
The review process revealed that the CDR Benchmarks are fundamentally viewed very
positively by stakeholders. The overarching principles – Accessibility, Independence,
Fairness, Accountability, Efficiency and Effectiveness – were described by stakeholders as
‘immutable.’159 They are described as a ‘rigorous framework’ for dispute resolution,
‘appropriate and well accepted’, ‘adaptable and durable’, ‘strong foundations’ for EDR, and
‘critical’ to the delivery of dispute resolution for one scheme.160 That said, the review also
highlighted a number of areas in which the CDR Benchmarks could be revised and updated.
A number of stakeholders raised the prospect of specifying certain criteria that industry
dispute resolution schemes should be required to meet as part of the CDR Benchmarks.
However, CCAAC considers the CDR Benchmarks should retain their more narrow purpose
of setting out principles for industry-based dispute resolution schemes and allow industries
flexibility to develop schemes tailored to meet their needs. While it is preferred that dispute
resolution services are not-for-profit and each sector should be represented by one scheme,
CCAAC is of the view that the CDR Benchmarks should not be prescriptive on such matters
at this time.
The CDR Benchmarks have had a successful history and will continue to provide effective
direction to new and existing dispute resolution schemes. Implementing the recommended
changes and relaunching the revised documents will assist in ensuring the future
effectiveness of the benchmarks.
159 CHOICE suggested an additional benchmark of ‘awareness’. In consultations with stakeholders, this was
deemed unnecessary. CCAAC agrees that ‘awareness’ continues to fit under the Accessibility Benchmark.
Following targeted consultation with stakeholders, CCAAC considers that it should remain as a key practice
element of one of the existing benchmarks.
160 Quotes from ANZOA, p.2; Cameronralph Navigator, p.6; CHOICE, p.4; CALC, p.1; and TIO, p.2,
respectively. See also Public Transport Ombudsman, p.3.
Page 35
REFERENCES
PUBLICATIONS
Australian Securities and Investment Commission,
ASIC Regulatory Guide 139 (RG 139), Approval and oversight of external dispute resolution
schemes, available at http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/
rg139-published-13-June-2013.pdf/$file/rg139-published-13-June-2013.pdf
Australian Securities and Investment Commission,
ASIC Regulatory Guide 165 (RG165), Licensing: Internal and external dispute resolution
Hally-Burton, Stephen; Shirodkar, Siddharth; Winckler, Simon; and Writer, Simon,
‘Harnessing the demand side: Australian consumer policy’, Treasury Economic Roundup,
Issue 4, 2008
National Alternative Dispute Resolution Advisory Council,
A Framework for ADR Standards: Report to the Commonwealth Attorney-General (Canberra:
Commonwealth of Australia, 2001
National Consumer Credit Regulations
Productivity Commission, Access to Justice Arrangements, Draft Report, Canberra, 2014
Standards Australia,
Australian Standard on Complaints Handling, AS 4269 – 1995 (Canberra: Standards
Australia), 1995
Telecommunications Legislation Amendment (Consumer Protection) Act 2014
Page 37
APPENDIX 1 — OVERVIEW OF THE CONSULTATION PROCESS
This study was informed by the views of dispute resolution schemes, industry stakeholders
and consumers.
On 24 April 2013, CCAAC released an Issues Paper, published on its website, which invited
interested stakeholders to respond with submissions on the questions contained in the Paper,
and other issues related to the study’s Terms of Reference. On its website, CCAAC extended
this invitation to other interested stakeholders.
Written non-confidential submissions are available on the CCAAC website located at
http://www.ccaac.gov.au. Non-confidential submissions were received by:
Airline Customer Advocate
Association for data-driven marketing and advertising
Australian Bankers’ Association
Australian Communications Consumer Action Network
Australian and New Zealand Ombudsman Association
Baljurda Comprehensive Consulting
Banking Ombudsman Scheme
Building Compliance Reform Association
Cameronralph Navigator
CHOICE
Consumer Action Law Centre
Consumer Credit Legal Centre (NSW)
Credit Ombudsman Service Limited
Electricity and Gas Complaints Commissioner (New Zealand)
Energy and Water Ombudsman NSW
Energy and Water Ombudsman Queensland
Energy and Water Ombudsman Victoria
Financial Ombudsman Service
Financial Planning Association of Australia
Insurance Council of Australia
National Financial Services Federation
Public Transport Ombudsman Ltd
Queensland Consumers Association
Margaret Singleton
Society for Consumer Professionals in Australia
Telecommunications Industry Ombudsman
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References
In addition, a series of targeted consultations with key stakeholders were conducted by
Mr Gordon Renouf, with the CCAAC Secretariat. These discussions were held in person and
through teleconferences taking place on 12 and 21 February 2014.
Participant
Representative/s
Date
Consumer Action Law Centre
Gerard Brody
12 February 2014
Electricity and Water Ombudsman NSW
Clare Petre*
12 February 2014
Western Australian Ombudsman
Chris Field*
12 February 2014
CHOICE
Matt Levey
12 February 2014
Queensland Consumers’ Association
Ian Jarratt
12 February 2014
Baljurda Comprehensive Consulting
John Wood
21 February 2014
Australian Bankers’ Association
Ian Gilbert
21 February 2014
Telecommunications Industry Ombudsman
Simon Cohen*
21 February 2014
Association of Independently Owned Financial Professionals
Peter Johnston
21 February 2014
* Also a member of ANZOA.
Following the targeted consultations, a supplementary submission was received by ANZOA
on 21 February 2014.
The CCAAC Secretariat liaised with government stakeholders including ASIC and the
Australian Competition and Consumer Commission.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
APPENDIX 2 — SUMMARY OF FINDINGS
Accessibility
•
The key practice of Awareness/Promotion should include an element encouraging a
scheme’s promotion efforts to focus on areas where a customer is likely to seek
information in the event of a dispute, such as the websites of consumer agencies and
advocacy services.
•
Additional key practices on Awareness/Promotion should be developed to assist
schemes to promote their schemes to customers with special needs, such as customers
with a disability or with a culturally and linguistically diverse background.
•
The key practice of Access should include an element to minimise any ‘virtual barriers’
to contacting a dispute resolution service; for example, that schemes can be contacted
online, and not limited to office openings or telephone contact hours.
•
Additional key practices on Legal Representation would assist schemes to determine
when paid representatives who act for customers in dispute resolution may be
appropriate.
•
A new key practice of Acceptance should recognise no-fee dispute resolution as an
essential component of accessibility for consumers, so that customers are not prevented
from accessing dispute resolution because of their financial situation.
–
This key practice should include information for schemes on ways of dealing with
potentially vexatious and frivolous complaints. This would support the
appropriate use of a scheme’s resources and minimise the risk of unreasonable
costs. In turn, this would support the sustainability of no-cost dispute resolution.
–
Dispute resolution services should outline how they will manage delays and
include possible ways to ‘triage’ complaints for action. Complaints could be
referred: to an alternative avenue for justice, or to a regulator; for liaison where
there may be an overlap in jurisdiction; or for acceptance as a case.
Independence
•
New and improved key practices across the CDR Benchmarks should be developed to
address concerns in relation to for-profit schemes. CCAAC notes some of the risks and
perverse incentives that may arise from for-profit schemes.
•
Additional key practices for the Overseeing entity would be useful to assist schemes to
ensure an appropriate balance of stakeholders is involved in scheme governance.
•
Additional key practices on the Decision-maker, Staff and Overseeing Entity would
assist schemes to ensure that any actual or perceived conflicts of interest and bias are
managed in a transparent way.
Fairness
•
The key practice of procedural fairness should incorporate additional elements of
procedural fairness, including provision of information to both customers and scheme
members, and ongoing communication by schemes.
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References
•
A new key practice should be included on Review of decision-making processes, to
encourage schemes to consider ways to ensure decisions are enforced. Consistency of
decision-making is also likely to be improved by this addition.
•
Key practices should be developed in relation to other aspects of procedural fairness,
including the timeliness of the provision of information to complainants and scheme
members, and ongoing communication on the progress of the investigation and
decision.
•
Enhanced key practices relating to other benchmarks would assist in addressing
enforceability.
Accountability
•
The key practice on Determinations should include an additional element to encourage
schemes to provide reasons for decision. Additionally, schemes should be encouraged
to publish guidance for industry and consumers relating to the application of the law
and how determinations will be made for different types of complaints. This would
enhance scheme transparency and accountability.
•
Schemes could consider the inclusion of information to assist in developing appropriate
enforcement mechanisms to ensure decisions are enforced, and to provide redress
where scheme members are deliberately non-compliant.
•
A new key practice on Responding to feedback could be included for schemes to accept
and respond appropriately to feedback received, and to elicit feedback from customers
and scheme members.
–
•
Feedback on a dispute resolution scheme from complainants and scheme
members could be used for continuous improvement and as a basis for public
reporting.
Additional key practices on Reporting should be developed, including resources and
examples to assist schemes to deliver best practice reporting.
Efficiency
•
The key practice of Compliance should include a new element detailing methods to
mandate or improve compliance with decisions, and ensure redress for customers
when a scheme member is non-compliant with a scheme’s decision or recommendation.
•
A new key practice of Timeliness would assist schemes to consider and act upon the
variety of aspects to the timeliness of processes. This applies to the timeliness of
acknowledging and responding to an initial complaint, time taken to investigate a
complaint, and time taken to make a decision.
•
A new key practice on Staff would assist schemes to ensure the professionalism of
scheme staff members, including appropriate qualifications and experience.
•
Resources can be wasted through schemes duplicating the efforts of bodies who have
already handled a complaint. Appropriate Process or Forum should include key
practices to assist schemes to consider how they can best handle an overlap of
jurisdiction with another scheme or tribunal.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Effectiveness
•
The key practice related to Systemic Problems should include a new element
encouraging schemes to alert regulators and policy makers to systemic issues based on
the cases brought to dispute resolution.
•
The key practice of Periodic independent review should include a new element
encouraging independent reviews at set periods.
•
For finance-related dispute resolution schemes, guidance on the implementation of the
CDR Benchmarks is not necessary as ASIC regulatory guidance is already in use.
•
Revisions and additions to key practices for other benchmarks would assist
stakeholders to address issues of effectiveness - for example, considering special needs,
reviewing decisions, enhancing communication and reporting, and improving
timeliness.
Page 42
References
APPENDIX 3 — PRINCIPLES AND PURPOSES
Accessibility
Underlying principle: The office makes itself readily available to customers by promoting
knowledge of its services, being easy to use and having no cost barriers.
Purpose: To promote access to the scheme on an equitable basis.
Independence
Underlying principle: The decision-making process and administration of the office are
independent from participating organisations.
Purpose: To ensure that the processes and decisions of the scheme are objective and
unbiased, and are seen to be objective and unbiased.
Fairness
Underlying principle: The procedures and decision-making of the office are fair,
transparent and seen to be fair and transparent.
Purpose: To ensure that the office performs its functions in a manner that is fair and seen to
be fair.
Accountability
Underlying principle: The office publicly accounts for its operations by publishing its final
determinations and information about complaints and reporting any systemic problems to
its participating organisations, policy agencies and regulators.
Purpose:
To ensure public confidence in the scheme and allow assessment and
improvement of its performance and that of participating organisations.
Efficiency
Underlying principle: The office operates efficiently by keeping track of complaints,
ensuring complaints are dealt with by the appropriate process or forum and regularly
reviewing its performance.
Purpose: To give the community and participating organisations confidence in the office
and to ensure the office provides value for its funding.
Effectiveness
Underlying principle: The office is effective by having appropriate and comprehensive
jurisdiction and periodic independent reviews of its performance.
Purpose: To promote community confidence in the office and ensure that the office fulfils its
role.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
APPENDIX 4 — KEY PRACTICES
Benchmark 1: Accessibility
Awareness/Promotion
1.1
The office161 seeks to ensure that those in the community who may require its services
are aware of its existence.
1.2
The office promotes its services in the media or by other means.
1.3
The office produces readily available material in simple terms explaining:
(a) How to access the office;
(b) How the office works;
(c) The major areas with which the office deals; and
(d) Any limits on the office’s powers.
1.4
The office requires participating organisations162 to inform customers163 about the
office.164 This may include providing information at the point of service (for example,
in displays or brochure stands), in contracts, codes of practice and customer service
charters, on websites and in newsletters and correspondence forwarded to customers.
1.5
The office ensures that information about its services, procedures and scope is made
available to customers by participating organisations when the participating
organisation responds to a complaint.165
1.6
The office also ensures that this information is made available by participating
organisations:
(a) when customers are not satisfied in whole or in part with the outcome of the
internal complaints mechanism166 of a participating organisation;
(b) when the participating organisation refuses to deal with a complaint; or
(c) when a reasonable time167 has passed for the participating organisation to resolve a
complaint, and the complaint remains unresolved, whichever first occurs.
161 The ‘office’ refers to a person or organisation providing external dispute resolution services. The type of
office established will differ according to the size and nature of the industry in which it operates.
162 ‘Participating members’ refers to any organisations which participate in a customer dispute resolution
service or are within the jurisdiction of the office.
163 The term ‘customer’ is used to refer to any consumers who purchase or have purchased goods or services
from participating organisations, and may also refer to someone affected by the participating organisation.
164 This key practice relates to general promotion of the services of the office by participating organisations. The
circumstances in which individual customers are required to be informed about dispute resolution services
is dealt with in key practice 1.5.
165 A ‘complaint’ is an expression of dissatisfaction about an organisation, related to its products and services,
or the complaints-handling process itself, where a response or resolution is explicitly or implicitly expected;
see the Standards Australia Standard on Customer Satisfaction: Guidelines for complaints handling in
organisations, AS ISO 10002 – 2006.
166 An ‘internal complaints mechanism’ refers to the system set up within a participating organisations to
handle complaints by customers or complainants
167 ‘Reasonable time’ will depend on a number of factors, including the requirements of any internal dispute
resolution procedure, the nature of the complaint and the inquiries required.
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References
1.7
The office promotes its services in such a way as to be sensitive to and inclusive of
customers with particular requirements, including those experiencing disadvantage.
This includes making information available in appropriate languages, and in
alternative formats such as large text and audio.
1.8
The office focuses its promotion efforts on areas where a customer is likely to seek
information in the event of a dispute; for example, the websites of consumer agencies
and advocacy services.
Access
1.9
The office seeks to ensure access to any person who may require its services.168
1.10 The office provides appropriate facilities and assistance to enable participation by
complainants across the community, including those with particular requirements and
those experiencing disadvantage. This includes allowing contact in a range of modes
(in person, by telephone, telephone typewriter, fax, email or online), providing
interpreter services, providing text in simplified English and/or available in large print
format.
1.11 Complaints can make initial contact with the office orally or in writing.169
1.12 There are arrangements for participating organisations to refer a complaint to the office
in appropriate circumstances.170
1.13 The jurisdiction of the office are expressed clearly.171
1.14 The office seeks to minimise any ‘virtual barriers’ to complainants, for example, by
providing 24-hour contact options such as an online complaint form.
Cost
1.15 There is no application or other fee or charge required from a complainant before a
complaint is dealt with by the office, or at any stage in the process.172
Staff Assistance
1.16 The office’s staff have the ability to handle complaints and are provided with adequate
training in complaints handling.
1.17 The office’s staff explain to complainants in simple terms:
(a) how the office works;
(b) the major areas it deals with;
(c) any limits on its powers; and
(d) the timelines applicable to each of the processes in the office.
168 Maximising access to the office could include measures such as providing toll free telephone access for
consumers/complainants.
169 In most cases the staff of a scheme will help a complainant reduce a complaint to writing where the
complainant requires assistance to do so.
170 Any arrangements for referrals by a participating organisation must consider relevant privacy laws and any
other legal requirements.
171 The jurisdiction of an office, setting out the functions of the office including the complaints the office can and
cannot deal with, may be included in documents such as legislation creating the office, the terms of reference
for the office, or the charter or constitution of the office.
172 In special cases, where an office agrees to provide services that are outside its jurisdiction at the request of a
complainant, there may be a limited exception to this rule.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
1.18 The office’s staff assist complainants to make a complaint, where complainants need
assistance to do so.
Use
1.19 The office’s processes are simple to understand and easy to use.
1.20 The office provides for a complainant’s case to be presented verbally or in writing, at
the discretion of the decision-maker.
1.21 The office provides for complainants to be supported by another person at any stage in
the office’s processes where necessary.
Acceptance by Office
1.22 The office assesses complaints received for timely and appropriate action: for referral
to an alternative avenue for justice, or a regulator; for liaison where there may be an
overlap in jurisdiction with another dispute resolution office; or for acceptance as a
case by the office.
1.23 The office follows a defined and transparent process for excluding potentially
vexatious or frivolous complaints to ensure appropriate use of the office’s resources
and minimise the risk of unreasonable cost increases.
Non-adversarial Approach
1.24 The office uses appropriate techniques including conciliation, meditation and
negotiation in attempting to settle complaints.173
1.25 The office provides for informal proceedings which discourage a logistic, adversarial
approach at all stages in the office’s processes.
Legal or other Representation
1.26 Parties should not be prohibited from having a support person in attendance.
1.27 Legal representation will generally only be allowed with the permission of the office.
Unless legal representation is required, having regard to the nature of the dispute and
issues involved, it will generally be discouraged by the office.174
1.28 Where an office agrees to one party being legally represented:
(a) the office will provide the opportunity for the other party to be legally
represented; and
(b) the office will require the participating organisation to pay the legal costs of
complainants where the participating organisation is the first party to be legally
represented.
173 While the focus of the scheme is mainly on alternative dispute resolution, it also has the function of making
final determinations about disputes – including arbitrating disputes – which cannot be resolved by
alternative dispute resolution techniques listed here are used before final determinations are considered.
Initially, complainants are encouraged to discuss their complaint with the participating organisation and use
any internal complaints mechanism that is available. Offices are then encouraged to attempt to settle
complaints before they are referred for a final determination. The office does not have to use all of the listed
alternative dispute resolution techniques nor in this particular order – but the ones cited in this key practice
are recognised techniques.
174 At times, it may be appropriate for paid representatives to act for consumers in the dispute resolution
process, for example, when a consumer experiences communication difficulties.
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References
Legal Proceedings
1.29 A participating organisation will not commence legal proceedings before a court,
tribunal or other forum in respect of a complaint before an office, except in special
circumstances. Special circumstances may include:
(a) where the legal limitations period for brining legal proceedings is about to expire;
and
(b) where the complaint is to be used as a test case in legal proceedings.
Benchmark 2: Independence
The Decision-maker
2.1
The scheme has a decision-maker175 who is responsible for the final determination of
complaints.
2.2
The decision-maker is appointed to the office for a fixed term.
2.3
The decision-maker is not selected directly by participating organisations, and is not
answerable to participating organisations for final determinations.176
2.4
The decision-maker has no relationship with the participating organisations that funds
or administer the office which could give rise to a perceived or actual conflict of
interest.
Staff
2.5
The office selects its own staff. The office’s staff are not answerable to participating
organisations for the operation of the office.
Overseeing Entity
2.6
There is a separate entity set up formally to oversee the independence of the office’s
operation.177
2.7
Where the office is established as a company, the overseeing entity must have a
balance of consumer, industry and, where relevant, other key stakeholder interests
involved in governance.
175 The ‘decision-maker’ refers to the individual, panel of individuals or other entity which is responsible for the
final determination of complaints. For most offices, the decision-maker will be the Chief Executive Officer
of the office. The decision-maker most commonly has the title of Ombudsman or Commissioner. For some
offices, a decision-maker may include a panel of persons charged with making a decision.
176 Where the decision-maker consists, for example, of a panel of individuals, only the chair or the individual,
who controls the decision-making process, is required to be independent of an industry or consumer
interests and be appointed by the entity which oversees the independence of an office’s operation. Where the
decision-maker consists of more than one individual, the chair ensures the independence of the decisionmaking. This allows for the relevant industry to be represented on the decision-making entity, as long as a
balance between consumers and industry is maintained.
177 There are a variety of arrangements which may be put in place to meet this requirement. For example, an
overseeing entity may include a council or other body usually consisting of an independent chair, consumer
member or members, member or members from participating organisations and, where relevant, other
stakeholder member or members. Offices established under statute may have specified the arrangements to
make sure the office is independent, and these offices may be subject to arrangements including
accountability to Parliament, Parliamentary Committee or Minister, in addition to or instead of an
overseeing entity. Smaller industry sectors or those with few complaints may not have the ability or need to
devote large resources to setting up such an entity. Other types of overseeing entities are not precluded as
long as they allow for suitable independence or a balance of competing interests.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
2.8
Representatives of consumer interests on the overseeing entity178 must be:
(a) capable of reflecting the viewpoints and concerns of consumers; and
(b) persons in whom consumers and consumer organisations have confidence.
2.9
As a minimum the functions of the overseeing entity should include:
(a) appointing or dismissing the decision-maker;
(b) making recommendations for or approving the office’s budget;
(c) receiving complaints about the operation of the office;179
(d) recommending and being consulted about any changes to the office’s jurisdiction;
(e) receiving regular reports about the operation of the office; and
(f) receiving information about systemic problems.
Transparency
2.10 The office manages any actual or perceived conflicts of interest and bias in a
transparent manner.
Funding
2.11 The office has sufficient funding to enable its caseload and other relevant functions to
be handled in accordance with the Benchmarks for Industry-based Customer Dispute
Resolution.
Terms of Reference
2.12 Changes jurisdiction of the office are made in consultation with relevant stakeholders,
including participating organisations, industry and consumer organisations and
government.
2.13 Participating organisations do not have a power or right to veto a proposed change to
the jurisdiction of the office or to significant rules and procedures.
Benchmark 3: Fairness
Final Determinations
3.1
The decision-maker bases final determinations180 on what is fair and reasonable,
having regard to good industry practice, relevant industry codes of practice and the
law.
178 Suitable consumer representatives can be ascertained by a number of methods, including the relevant
consumer organisation providing a nominee, advertising for representatives, or the relevant consumer
affairs agency or Minister responsible for consumer affairs nominating a representative. Suitable industry
and other stakeholder representatives can be sought from the relevant industry association or stakeholders
respectively.
179 The receipt of complaints about the scheme’s operation (by the entity which oversees the independence of a
scheme’s operation) does not extend to receiving appeals against the determinations of the decision-maker.
180 The term ‘final determinations’ is used to refer to the final decision made by the decision-maker when
determining a complaint. For some offices, a final determination may be in the form of a recommendation to
a participating organisation.
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References
Procedural Fairness
3.2
The office’s staff advise complaints of their right to access other redress mechanisms at
any stage if they are dissatisfied with any of the office’s decisions181 or with the
decision-maker’s final determination.
3.3
The office provides information to both parties at the same time, including timely
ongoing communication on the progress of the investigation and decision.
3.4
Both parties can put their case to the decision-maker.
3.5
Both parties are told the arguments, and sufficient information to know the case, of the
other party.
3.6
Both parties have the opportunity to rebut the arguments of, and information provided
by, the other party.
3.7
Both parties are told of the reasons for any decision in writing.
3.8
Both parties are told of the reasons why a complaint is outside jurisdiction or is
otherwise excluded.
Provision of Information to the Decision-Maker
3.9
The decision-maker encourages but cannot compel182 complainants to provide
information relevant to a complaint.
3.10 The decision-maker can demand that participating organisations provide all
information which, in the decision-maker’s view, is relevant to a complaint, unless that
information identifies a third party to whom a duty of confidentiality or privacy is
owed,183 or unless it contains information which the participating organisation is
prohibited by law from disclosing.
Confidentiality
3.11 Where a participating organisation provides information which identifies a third party,
the information may be provided to the other party with deletions, where appropriate,
at the discretion of the decision-maker.
3.12 The office ensures that information provided to it for the purposes of resolving
complaints is kept confidential, unless disclosure is required by law or for any other
purpose specified in the Benchmarks for Industry-Based Customer Dispute Resolution.
Review of Decisions and Determinations
3.13 The office establishes a process to review decisions and determinations for consistency
and compliance, such as selective sampling and auditing of cases.
181 The term ‘decisions’ is used to refer to any decision made by the office’s staff other than final determinations.
182 An exception to this requirement may occur where an office has been established under statute, and the
statute provides for the office to compel the production of information.
183 Where a duty of confidentiality or privacy is owed to a third party in relation to information sought by the
decision-maker, the participating organisation can seek the permission to the third party to release that
information to the decision-maker in full or with deletions as appropriate.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Benchmark 4: Accountability
Procedures
4.1
The office makes available to participating organisations, complainants and other
interested bodies its guidelines and policies for dealing with complaints.
Final Determinations
4.2
The office makes available written reports of final determinations and the reasons for
the decision184 to participating organisations and any interested bodies for purposes
including:
(a) educating participating organisations and the community; and
(b) demonstrating consistency and fairness in decision-making.
4.3
Public reports of final determinations do not name parties involved.
Responding to Complainants and Participating Organisations
4.4
The office uses comments received from complainants and participating organisations
to inform the continuous improvement of their internal processes and procedures, and
to inform their public reporting.
Annual Report
4.5
The office publishes a detailed and informative annual report containing specific
statistical and other data about the performance of the office, including:
General information
(a) a description of the jurisdiction of the office (for example, a list of participating
organisations and outline of complaints that can be received);
(b) information about how the office works;
(c) information about how the office ensures equitable access;
(d) information about new developments or key areas in which policy or education
initiatives have been undertaken or are required;
(e) a list of participating organisations supporting the office, together with any
changes to the list during the year;
(f) where the office’s jurisdiction permits, the names of those participating
organisations which do not meet their obligations as members of the office.185
Information about complaints
(a) the number and types of complaints it receives and their outcome, including
information outlining the complaints received and outcomes for each of the
participating organisations;
184 Written reports of final determinations can consist of a concise summary of a decision-maker’s
determination and reasons for so determining. It is not necessary for public written reports of all
determinations made by the decision-maker. The final determinations which are reported should be left to
the office’s discretion. It is not envisaged that written reports would necessarily be provided of other
decisions (apart from final determinations) made by the office.
185 The office’s jurisdiction should state whether it will disclose the names of participating organisations which
do not meet their obligations to the office. Examples of where a participating organisation does not meet its
obligations to the office will include where it does not provide information as and when requested, or where
it does not comply with a final determination.
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References
(b) the time taken to resolve complaints;
(c) any systemic problems arising from complaints;
(d) examples of representative case studies and reports on investigations;
(e) in appropriate cases, information about any participating organisations which do
not meet their obligations.186
4.6
The annual report is to be made public, including through distribution to participating
organisations, relevant stakeholders and otherwise made available upon request.
Benchmark 5: Efficiency
Appropriate Process or Forum
5.1
The office will only deal with complaints which are within its jurisdiction. The office
will generally not deal with complaints that have been dealt with, or are being dealt
with, by another dispute resolution forum.187 The office will generally only deal with
complaints:
(a) which have been considered, and not resolved to a person’s satisfaction, by a
participating organisation’s internal dispute resolution mechanism; or
(b) where a participating organisation has refused, or failed within a reasonable
time,188 to deal with a complaint under its internal dispute resolution mechanism.
5.2
Any provision in the internal dispute resolution mechanism of a participating
organisation requiring a complaint to reach a deadlock before it can be dealt with by
the office must be reasonable, and must allow the office to deal with a complaint where
it is clear that it has not been resolved to the satisfaction of the person making the
complaint in reasonable time.
5.3
The office has mechanisms and procedures for referring complaints that are not within
its jurisdiction to other, more appropriate, forums.
5.4
The office liaises with other forums where there is a complaint entailing a potential
overlap in jurisdiction.
5.5
The office has mechanisms and procedures for dealing with systemic problems that
become apparent from complaints, including by investigating these issues or referring
them to relevant participating organisations, or to regulators or policy makers.
5.6
The office excludes vexatious and frivolous complaints, at the discretion of the
decision-maker.
Timeliness
5.7
The office considers timeliness in all of its processes and procedures, including the
timeliness of acknowledging and responding to an initial complaint, time taken to
investigate a complaint, and the time taken to make a decision.
186 Examples of where a participating organisation does not meet its obligations will include where it does not
provide information as and when requested, or when it does not comply with a final determination.
187 Complaints which have been made to one scheme but are found to be more appropriately dealt with by
another scheme can be dealt with by the latter scheme. It is where a complaint has been subsequently
considered by one scheme that a complainant is discouraged from forum-shopping.
188 ‘Reasonable time’ will depend on a number of factors, including the requirements of any internal dispute
resolution procedure, the nature of the complaint and the inquiries required.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
Tracking of Complaints
5.8
The office has reasonable time limits set for each of its processes which facilitate speedy
resolution without compromising quality decision-making.
5.9
The office has mechanisms to ensure compliance with time limits, as far as possible.
5.10 The office has a system for tracking the progress of complaints.
5.11 The office’s staff keeps the parties informed about the progress of their complaint.
Monitoring
5.12 The office sets objective targets against which it can assess its performance.
5.13 The office keeps systemic records of all complaints and enquiries, their progress and
their outcome.
5.14 The office conducts regular reviews of its performance.
5.15 The office’s staff seeks periodic feedback from complainants and participating
organisations about their perceptions of the performance of the office.
5.16 The office reports to the overseeing entity on the results of its monitoring and review.
Professionalism
5.17 The office recruits staff with the requisite skills, qualifications and experience to
perform the work efficiently.
Benchmark 6: Effectiveness
Coverage
6.1
The scope of the office and the powers of the decision-maker are clear.
6.2
The scope of the office (including the decision- maker’s powers) is sufficient to deal
with:
(a) the vast majority of complaints in the relevant industry or service area and the
whole of each such complaint; and
(b) complaints involving monetary amounts up to a specified maximum that is
consistent with the nature, extent and value of customer transactions in the
relevant industry.189
6.3
The decision-maker has the power to make monetary awards of sufficient size and
other awards (but not punitive damages) as appropriate.190
Systemic Problems
6.4
The office has mechanisms for referring systemic industry problems, based on cases
brought to dispute resolution, to an appropriate regulator for action if required.
189 This requirement applies only where a monetary limit is specified. Because the loss arising from the
determination of a complaint may vary according to the industry or service area concerned, the Benchmarks
Key Practices do not specify a monetary limit above which complaints are excluded from the office.
190 A monetary award includes a final determination.
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6.5
The office has mechanisms to determine when to bring systemic problems to the
attention of policy agencies or other relevant bodies, such as industry associations.
Office Performance
6.6
The office has appropriately qualified staff to undertake its functions, and provides
ongoing professional development and appropriate resources and processes to allow
staff to effectively undertake their functions.
6.7
The office has procedures in place for:
(a) receiving complaints about the office; and
(b) where appropriate, referring complaints about the office to the overseeing entity
for action.
6.8
The office responds to complaints and any recommendations of the overseeing entity
in a timely and appropriate manner.
Internal Dispute Resolution Mechanisms
6.9
The office requires participating organisations to set up internal dispute resolution
mechanisms, and to inform those affected by the organisation’s services about the
mechanisms.191
6.10 The office has the capacity to advise participating organisations about their internal
dispute resolution mechanisms.
Compliance
6.11 The office has mechanisms to encourage participating organisations to cooperate with
the office, and to abide by the rules of the office.192
6.12 Final determinations of the decision-maker that are not recommendations are binding
on the participating organisation if complainants accept the determination.
6.13 The office has methods to mandate or improve compliance with decisions, and ensure
redress for customers when a participating member is non-compliant with an office’s
final determination, decision or recommendation.
Periodic Independent Review
6.14 The operation of the office is reviewed regularly by an independent party at set
periods.
6.15 The review, undertaken in consultation with relevant stakeholders, includes:
(a) the office’s progress towards meeting the Benchmarks for Industry-based
Customer Dispute Resolution;
(b) whether the scope of the office is appropriate;
(c) participating organisation and complainant satisfaction with the office;
(d) assessing whether the dispute resolution process used by the office are just and
reasonable;
191 The Standards Australia Standard on Complaints Handling AS 4269-1995 can assist participating organisations
to set up appropriate internal dispute resolution mechanisms.
192 Mechanisms for encouraging participating organisations to abide by the rules of the office could include
statutory requirements, contractual obligations of the participating organisation, or naming in annual
reports or otherwise those participating organisations which do not abide by the rules of the office.
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Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes
(e) the degree of equitable access to the office; and
(f) the effectiveness of the statute, charter, terms of reference or other document
establishing the office, its jurisdiction, functions, rules and procedures.
6.16 The results of the review are made available to relevant stakeholders.
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