New year, new FOS terms of reference

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1 February 2010

Insurers and brokers face new dispute rules after the Financial Ombudsman Service (FOS) marked the new year with the introduction of a unified terms of reference.

The new parameters took effect on January 1 following approval by the Australian Securities and Investments Commission in December.

The new terms are designed to provide a more consistent treatment of consumers and industry participants, replacing five separate sets of rules and guidance procedures.

Under the new terms for general insurance, complainants are able to access FOS to deal with insurance claims up to a value of $500,000, replacing a previous limit of $280,000. Compensation payments for general insurance remain capped at $280,000.

Clients of insurance brokers are now entitled to access FOS for claims worth up to $500,000, a big increase on the previous limit of $100,000. Maximum compensation for broking disputes remains capped at $100,000, but will rise to $150,000 from January 1 2012.

Under the new terms, money for consequential loss and interest may be added to compensation awards.

National Insurance Brokers Association CEO Noel Pettersen told insuranceNEWS.com.au he expects few problems for brokers to emerge.

“The type of disputes that FOS can consider in relation to insurance brokers will basically remain the same as was applicable under Insurance Brokers Disputes Limited,” he said.