The Financial Ombudsman Service (FOS) provides a dispute resolution scheme to help people in disputes with their insurance companies.
Advantages of dispute resolution schemes
The advantages of using a dispute resolution scheme rather than going to court are:
- they are familiar with insurance law
- they are free
- you do not need a lawyer to use them
- they will help investigate the complaint
Complaints against brokers
For complaints against insurance brokers the Insurance Brokers Dispute Facility is the relevant scheme to deal with disputes (see Complaints about brokers).
The complaints process
Before going to Financial Ombudsman Service you must attempt to resolve the complaint with your insurer directly.
The internal review by the insurer is not window dressing. If a complaint is taken to the Financial Ombudsman Service the insurer will have to pay a fee, so it has an economic incentive to establish proper internal complaint resolution procedures.
If the matter cannot be resolved with the insurer it may then be taken to the Financial Ombudsman Service, which will conduct an investigation.
If the complaint is not settled or conciliated at this stage, it is referred to a panel of the Financial Ombudsman Service (FOS).
What the panel will consider
The terms of reference of the FOS require the panel to give consideration to 'what is fair and reasonable in all the circumstances, to good insurance practice, the terms of the policy and established legal principle'.
It may therefore be possible to argue that a claim should be paid because the conduct of the insurer was unreasonable or unfair, even if it was legal.
Making a submission to the panel
The following points should be addressed in a submission to the panel:
- The letter of complaint should clearly state why the claim should be paid. It should specifically address any reasons the insurance company has given for refusing the claim or rejecting the complaint.
- If the claim depends on what was said between the consumer and the insurer, the conversations should be reported as precisely as possible. Any supporting details should also be provided, such as information that would make it more likely that the consumer should be believed (for example, the person relied on oral statements because they could not read English).
- If it is being argued that the person did not receive various documents (and that, for example, the insurer should pay because it breached s.35 of the Insurance Contracts Act), the history of the sale of the policy should be set out in detail, identifying what documents were received.
The panel's decision
The decisions of the Financial Ombudsman Service are not binding precedents. Each case is considered individually on its facts.
The panel's decisions are not binding on consumers either - a person who is dissatisfied can reject the decision and pursue court action.
The Financial Ombudsman Service (FOS) is a national external dispute resolution service providing free assistance to consumers to help in resolving disputes relating to general insurance matters.
Assistance is limited to individuals and small businesses. Whilst all participating members agree to comply with binding determinations made by the FOS, consumers are not bound by any determination and retain their right to legal action or other remedies if dissatisfied with the decision.
Types of insurance matters dealt with include most domestic insurance:
- Home building
- Home contents
- Motor vehicle
- Travel
- Sickness and accident
- Consumer credit
- Valuables and personal property
- Medical indemnity
The Financial Ombudsman Service can also consider some residential strata title policies, certain small business policies and third party motor vehicle disputes for uninsured drivers where the property damage does not exceed $3000.
Assistance is restricted only to those matters which fall within the Service’s terms of reference and for insurers who were members at the time the complaint arose. Disputes concerning amounts greater than $280,000 are not covered by the FOS.
What matters cannot be heard?
- Worker’s compensation
- Home owner’s warranty
- Public liability
- Product liability
- Compulsory third party motor vehicle insurance
Time limit
The complaint must be made no more than three calendar months after the person receives notice of the insurer's 'final decision' i.e. the decision made after an internal review at the person's request.
Procedure for making a complaint
Step 1: consumer must make complaint directly to the insurance company.
Step 2: if the complaint is not resolved within a reasonable time or not resolved to the consumer’s satisfaction they may request that the matter be dealt with by the company’s internal dispute resolution process.
Step 3: if the consumer is unhappy with the internal dispute resolution process they may call the Insurance Ombudsman Service or download a complaint form from their website. A copy of the final decision letter from the company must be included in the application. A complaint must be lodged within 3 months of the final decision of the company concerned.
Step 4: the IOS will attempt to resolve the dispute. If it cannot be resolved then information will be sent to an independent decision maker who will decide the dispute and provide a written decision detailing the reasons behind the decision.
Step 5: if the consumer accepts the decision it must be accepted within 1 month of the date of determination. The company must then comply with the the decision within 1 month of the date of the consumer’s acceptance. A consumer may be asked to sign an agreement indicating that they have no further claim against the company.
Step 6: if the consumer does not accept the decision it is not binding on them and they may choose to take legal or other action.
Procedure for making a complaint
Step 1: consumer must make complaint directly to the insurance company.
Step 2: if the complaint is not resolved within a reasonable time or not resolved to the consumer’s satisfaction they may request that the matter be dealt with by the company’s internal dispute resolution process.
Step 3: if the consumer is unhappy with the internal dispute resolution process they may call the Financial Ombudsman Service or download a complaint form from their website. A copy of the final decision letter from the company must be included in the application. A complaint must be lodged within 3 months of the final decision of the company concerned.
Step 4: the FOS will attempt to resolve the dispute. If it cannot be resolved then information will be sent to an independent decision maker who will decide the dispute and provide a written decision detailing the reasons behind the decision.
Step 5: if the consumer accepts the decision it must be accepted within 1 month of the date of determination. The company must then comply with the the decision within 1 month of the date of the consumer’s acceptance. A consumer may be asked to sign an agreement indicating that they have no further claim against the company.
Step 6: if the consumer does not accept the decision it is not binding on them and they may choose to take legal or other action.
The Financial Ombudsman Service (FOS) provides a free national external dispute resolution service to consumers to help in resolving disputes relating to life insurance, superannuation and investment matters.
Types of matters dealt with include:
- Life insurance
- Superannuation
- Retirement savings accounts
- Funds management
- Financial advice
- Investment advice
- Financial and investment products
Assistance is restricted only to those matters which fall within the Service’s terms of reference and for insurers who were members at the time the complaint arose. Disputes concerning amounts greater than $280,000 for life insurance and $150,000 for funds management, stockbroking, investment and financial advices are not covered by the FOS.
An attempt must be made to resolve the dispute with the insurer or financial service provider concerned before FOS will be able to assist. If after attempting internal dispute resolution a consumer is not satisfied they can lodge a complaint with FOS.
The Private Health Insurance Ombudsman (PHIO) can deal with complaints and enquiries about health insurance. Before contacting the PHIO you should contact the health fund to let them know about the problem and give them an opportunity to resolve it.
What complaints can be dealt with by the PHIO?
Complaints may be about a private health fund, a broker, a hospital, a medical practitioner, a dentist or other health care practitioner as long as the complaint relates to private health insurance.
What complaints cannot be dealt with by the PHIO?
Complaints regarding the quality of service or treatment provided by a health professional or hospital should be directed to the Health and Community Services Complaints Commissioner.
The PHIO also does not deal with complaints regarding Medicare. Medicare complaints should be directed to their Complaints and Feedback line on 1800 465 717.
How to complain
Step 1: contact the health fund concerned directly and advise them of your complaint.
Step 2: if there no resolution can be achieved through the health fund concerned, contact the PHIO with details of your complaint.
The PHIO provides a complaints hotline on 1800 640 695 and an online complaints form is available on their website.
Complaints can also be lodged by email at info@phio.org.au. When lodging an email complaint please include details of:
- your complaint
- the name of the health fund concerned
- your name, address and contact information
- any other information that will help explain the problem
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The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.
