Last updated 28 November 2016

All credit providers are required to provide free independent dispute resolution to consumers. Again complaints can be directed to the Financial Ombudsman Service or the Credit and Investments Ombudsman.

Role of the financial services ombudsman schemes

Almost all lenders must belong to an external dispute resolution scheme approved by the Australian Securities and Investments Commission.

All lenders and mortgage brokers with a licence under the National Consumer Credit Protection Act 2009 (Cth) are required to be members of a scheme, and most debt collectors and credit reporting agencies are also members.

Consumers can lodge disputes with the ombudsman scheme that the lender belongs to free of charge. The consumer will not have to pay the lender’s cost of responding to the dispute even if they are unsuccessful.

The ombudsman will review the dispute and make a decision based on the law, industry codes of practice, best industry practice, its rules (terms of reference) and what is fair and reasonable in all the circumstances. Resolving the complaint may happen by negotiation, conciliation, recommendation or a determination made by the ombudsman.

The ombudsman is free, and its decision making is regulated by the law and independent of its lender members.

There are jurisdictional limits to each scheme, and the first assessment when a dispute is lodged is to establish if the case can be considered by the ombudsman under its rules or terms of reference.

While the dispute is being considered by the ombudsman, the lender must not proceed with legal proceedings.

If the consumer does not agree with the decision of the ombudsman, they are free to take the case to court, however, the lender is contractually bound to accept the ombudsman’s decision.

In most cases it is too late to lodge a dispute after a court judgment is obtained, but the consumer can lodge a dispute if they have been served with a statement of claim and have not yet filed a defence.