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Regulators’ culture in question
The Australian 12:00am May 17, 2018
Richard Gluyas
Poor culture in large corporations has never been under more intense scrutiny, with the damning review of Commonwealth Bank by an APRA panel and the extraordinary implosion of AMP in the wake of last month’s royal commission hearings on financial advice.
But what of the culture inside our regulators and powerful quasi-judicial bodies, such as the industry funded Financial Ombudsman Service?
As the Australian Financial Complaints Authority — the one-stop shop for all financial complaints and disputes — absorbs FOS and starts hearing complaints by November 1, there are serious, lingering concerns about the discovery of inaccurate file notes made in 2015 by a senior FOS official, Justi Tonti-Filippini.
While Tonti-Filippini had the title Ombudsman Decisions and was mentioned in the body’s 2017 annual report, a FOS staffer told Four Pillars she no longer worked there.
Despite this, the fallout continues from her controversial handling of the case brought by toy and kite maker Goldie Marketing against ANZ Bank.
Rex Patrick, a Centre Alliance (formerly Nick Xenophon Team) senator, says he’s been in discussions with Financial Services Minister Kelly O’Dwyer about expanding AFCA’s terms of reference to include procedural fairness, as well as other administrative tribunal standards.
“I hold concerns in relation to this and am continuing my discussions with the minister on this issue,” Patrick says.
The core issue is a series of telephone conversations in October 2014 between Tonti-Filippini and Goldie’s adviser Bruce Ford of Dispute Assist, in which the ombudsman told Ford she was ruling the case outside FOS’s terms of reference because of a staff shortage.
In particular, there was a lack of key staff with banking expertise.
Ford was stunned and Goldie decided to up the ante, arguing in the Victorian Supreme Court that a staff shortage was not a valid reason to decline jurisdiction.
When FOS lodged its documents with the court, the case took an unexpected turn.
Tonti-Filippini’s file notes suggested that she had provided a host of other reasons for declining to hear the case.
The problem for FOS was that Ford had recorded the conversations — for his own legal protection and that of his client.
While the court accepted the recordings were accurate, it nevertheless upheld FOS’s ruling that the Goldie case was outside its terms of reference. Importantly, however, the court didn’t rely on the file notes from Tonti-Filippini; it ruled instead that her later written reasons were sound.
The matter did not end there.
ASIC, which oversees FOS, was subsequently forced to correct the parliamentary record when it told a committee that the Supreme Court had considered the issue of the divergence between the tape recordings and the FOS file notes.
In a subsequent letter to Ford, ASIC deputy chairman Peter Kell accepted that this was not the case.
FOS said in a written response to questions from this column that it did not comment on staffing, and that the issues in the Goldie case had been “fully canvassed and addressed”.
“At the time the issue was raised — following the court’s decision upholding FOS’s decision making — FOS made clear it did not agree with the assertions or that there were any implications for the fair, efficient and independent operation of FOS’s dispute scheme,” the statement said.
FOS said it had dealt with 100,000 dispute cases since the Goldie matter, both in line with its terms of reference and as a fair, timely and impartial dispute resolution scheme.
The service might retain complete confidence in itself, but others are not so sure.