ISO overhaul urged in five-year review
An independent review of the Insurance and Savings Ombudsman (ISO) scheme has criticised it for ignoring previous recommendations and for not tackling "systemic issues" in the industries it polices.
Tuesday, August 12th 2008, 9:10PM
by David Chaplin
Under its governance rules, the ISO is obliged to undergo an independent review of its operations every five years - the latest report, published last week, is the third such investigation.
According to the review, the number of previous recommendations rejected was "significantly higher than anything we have seen elsewhere".
As well, the report noted "these rejections are distinguished because they have had the apparent support of the Commission and the Ombudsman but were delayed or rejected by the other part of the governance system - the ISO Board".
"This is not a healthy indicator - neither for the independent reviews of the scheme nor for the governance of the scheme. We note that his has been raised previously by the 2003 Review," the latest report said.
Furthermore, The Navigator report encouraged the ISO to use its powers to identify and deal with "systemic" problems in the industries it rules on.
"The ability to act on systemic issues will become more important if the ISO becomes involved in handling complaints about other parts of the financial sector - in particular, if that includes advisers (insurance brokers, stock brokers, financial planners etc)," the review said. "Many of the complaints arising from these firms relate to disputes over mis-selling or misleading advice - and frequently affect more than one client."
The Navigator made a number of other wide-ranging suggestions including: setting a two-month limit for companies covered by the scheme to deal with complaints internally before the ISO can take over rather than having to wait for a 'deadlock' letter to be produced; removal of the 'two-tier' governance structure; reviewing the ISO legal and voting rules to prepare for an enhanced role under coming financial sector regulations, and; amending the terms of reference to allow the ISO to award up to $1,000 in incidental expenses.
According to the report, there was also a good case for lifting the monetary limit on cases the ISO can deal with from the current $150,000 to $200,000.
The Navigator study said "we are quite concerned that industry is doing its reputation little good in appearing to resist increases [of the monetary limit] at every turn". The ISO was not available for comment.
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