Senator Nick Sherry, Minister for Superannuation and Corporate Law, has welcomed the Australian Securities and Investment Commission's (ASIC) release of revised guidance on dispute resolution schemes as a positive development that will see more consumer complaints handled in low-cost External Dispute Resolution (EDR) forums.
The changes announced today by ASIC will also introduce a new "compensation caps" approach which means all EDRs will be able to hear cases up to the value of $500,000, the level of the retail client test. The amount of compensation schemes will be able to award is a maximum of $280,000, or $150,000 if the claim relates to insurance brokers.
Currently, the maximum award amount for EDR schemes is inconsistent and individual schemes cannot hear cases that are worth more than their own minimum cap, which limits coverage.
"Low-cost dispute resolution is highly effective for consumers and providers, keeps cases out of the courts and speeds up claims resolution. Today's measures broaden the range of cases that can be resolved in this way and that's to be welcomed."
"The revised guidelines for disputes schemes will mean better outcomes for consumers because a wider range of complaints can be handled and where necessary, an appropriate level of monetary compensation can be awarded."
"Some scheme caps haven't been updated recently, so the move to compensation caps, as outlined in the guidelines and the setting of a maximum $280,000 compensation cap, is a necessary reform designed to ensure EDRs are brought into the 21st century and reflect the true value and extent of consumer transactions," Minister Sherry said.
The guidelines also complement the Rudd Government's recent release of draft legislation creating single, national regulation of consumer credit, including mortgages, credit cards, payday lending and margin lending, and access to low cost, timely dispute resolution.
Most new requirements, including the move from monetary limits to compensation caps, will be implemented from 1 January 2010. The new level for compensation caps will be implemented from 1 January 2012 to allow industry time to transition.