The Financial Services Council disagrees with the Financial Ombudsman Service’s proposed membership levy hike.
FOS wants to increase the maximum membership levy by more than double – from $11,000 to $25,000. The levy includes membership, a user charge and dispute resolution fees.
In response to a fee review consultation paper FOS released at the end of October, FSC submitted the proposed new maximum membership levy – equivalent to 227% of the current maximum rate – is too high, especially for the conglomerate groups many FSC members belong to.
Instead, it should consider a maximum and capped group aggregate membership levy where a FOS member is part of a related corporate group made up of other members, FSC said.
“For example, FOS may determine that the maximum aggregate membership levy payable across related FOS members within a corporate group, cannot exceed [say] $100,000. That would mean that corporate groups with more than four FOS members would not pay more than $100,000 in aggregate for the (base) membership levy,” FSC suggested.
It pointed out for a FOS member who has no or negligible cases registered against them, the increase in membership levy will represent a significant increase in their total
FOS had suggested a fee hike to keep abreast of its operation costs. It said fee levels were still at 2010 levels and these were not keeping up with dispute costs and staff pay.
“To balance the volatility of demand, we propose a moderate rebalancing between the membership levy and user charge, and the dispute fees,” FOS said.
While the maximum membership levy is jumping by 227%, FOS said for around 72% of licencee members this means only a $55 increase, as they will continue to pay the minimum levy.
The Authorised Credit Representative Membership fee is set to increase from $66 to $125.
While there will be “no fundamental change” to the fee structure, said FOS, it intends to review the funding model every three years from now on.
How to avoid Ombudsman action: 10 top tips
Revealed: The big mistake that incurs Ombudsman wrath
Ombudsman pushing PI costs up