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REVIEW OF THE CDISPUTE RESOLU

BACKGROUND

June 200

This Paper has been produced by CUDbackground information for the assistaninterested in the review or in CUDRC. Aviews or conclusions and do not necessreviewer.

te Resolution Centre entre Pty Ltd ABN 64 075 629 391

lbourne, Vic, 3001 1300 78 0808 03) 9620 4446

REDIT UNION TION CENTRE

PAPER

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RC. Its purpose is to provide ce of the reviewer and for those ny views expressed are internal arily represent the views of the

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 4

1.1 Background to the Review 4

1.2 Purpose and Content of the Background Paper 5

CHAPTER 2: BACKGROUND TO CUDRC 7

2.1 Background 7

2.2 How CUDRC developed 8

2.3 Change in Dispute Manager 11

2.4 ASIC Approval of CUDRC 12

2.5 Present Position 13

CHAPTER 3: THE STRUCTURE OF CUDRC 14

3.1 The powers and role of the Manager 14

3.2 The structure and role of the Board 14

3.3 Membership of CUDRC 16

3.4 The funding of the scheme 16

3.5 The people 16

CHAPTER 4: THE JURISDICTION OF CUDRC 18

4.1 Introduction: the Terms of Reference of CUDRC 18

4.2 The jurisdiction of CUDRC in summary 18

4.3 Matters outside the jurisdiction of CUDRC 19

4.4 The monetary limit: its rationale, past increases and future considerations 21

4.5 Remedies available 24

CHAPTER 5: DISPUTE RESOLUTION AND DECISION-MAKING PROCESSES 26

5.1 Accessing CUDRC 25

5.2 After receipt of a written dispute 27

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5.3 Stages of Resolution: referral to and response by the member 28

5.4 Stages of Resolution: Investigation 29

5.5 Stages of Resolution: Determination 32

5.6 Procedural fairness in practice 33

5.7 Fairness in outcomes 34

CHAPTER 6: RAISING STANDARDS: ANCILLARY ROLES OF AN EDR SCHEME 36

6.1 Identifying and resolving systemic issues 36

6.2 Member and external education 38

CHAPTER 7: SYSTEMS, DATA COLLECTION AND REPORTING 39

7.1 The use of technology in CUDRC processes 39

7.2 Collecting and recording of case information 40

7.3 Reporting to stakeholders and the public 41

7.4 Monitoring members’ compliance 43

7.5 Performance targets 44

7.6 Recording and reporting systemic issues 44

CHAPTER 8: FUTURE PLANNING FOR THE BOARD OF CUDRC 46

8.1 Issues for the future 46

LINKS FOR FURTHER INFORMATION 48

APPENDIX 1: ASIC POLICY STATEMENT 139.151

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Chapter 1: Introduction

1.1 Background to the Review

1.1.1 Credit Union Dispute Resolution Centre (CUDRC) is an independent

dispute resolution service which considers and seeks to resolve disputes

between Australian credit unions who are members of CUDRC and their

individual and small business customers. It is an alternative to litigation

and free to individuals and small business.

1.1.2 CUDRC is approved by the Australian Securities and Investments

Commission (ASIC) as an external dispute resolution scheme for financial

services licensees under Part 7 of the Corporations Act 2001 (Cth). ASIC is an

independent Australian government body, which regulates companies and

financial services providers and enforces the relevant laws. Sections

912A(1) (g) and 912A(2) of the Corporations Act require a licensee providing

financial services to retail clients, as defined in the Act, to have a dispute

resolution system that includes membership of an external dispute

resolution scheme approved by ASIC. Policy statements are issued by ASIC

to provide guidance on matters relevant to compliance with Part 7 of the

Corporations Act. Policy Statement 139, ‘Approval of External Dispute

Resolution Schemes’, sets out guidelines for the approval of schemes such

as CUDRC.

1.1.3 CUDRC was approved by ASIC in September 2002. Some 143 Australian

Credit Unions have joined CUDRC.

1.1.4 Clause 9.3(c) of the Constitution of Credit Union Dispute Resolution Centre

requires the Directors to commission an independent

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review of the operations and procedures of the scheme every three years or

more frequently if the Directors consider this to be appropriate.

1.1.5 The requirement of the Constitution is consistent with ASIC Policy

Statement 139, ‘Approval of external complaints resolution schemes’,

paragraph PS 139.92:

‘A scheme should commission an independent review of its operations and

procedures every three years. This time frame should not preclude a review

occurring sooner if appropriate.’

1.1.6 Pursuant to this requirement, the Board of CUDRC has commissioned an

independent review of the operations and procedures of CUDRC to take

place in 2005.

1.2 Purpose and Content of the Background Paper

1.2.1 Under PS 139, an ASIC-approved scheme such as CUDRC is required to

have certain characteristics. These are:

• accessibility;

• independence;

• fairness;

• accountability;

• efficiency; and

• effectiveness.

1.2.2 The purpose of this Background Paper is to provide information about the

operations and procedures of CUDRC for the reviewer and for those

interested in the review who may wish to provide comment to the reviewer

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or otherwise inform themselves about CUDRC.

1.2.3 This Background Paper describes the history, structure, jurisdiction,

processes and systems of CUDRC. It concludes by raising a number of

issues relevant to future planning by the CUDRC Board.

1.2.4 The Terms of Reference of the review have been set by the Board. They

have been provided to and will be available from the reviewer.

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Chapter 2: Background to CUDRC 2.1 Background

2.1.1 The Credit Union Dispute Resolution Centre (CUDRC) is the ASIC

approved external dispute resolution provider for the majority of

Australian credit unions. Funded by participating credit unions, the

scheme offers independent and impartial dispute resolution services to

credit union members with costs paid by participating credit unions.

CUDRC is approved by the Australian Securities and Investments

Commission as an approved external dispute resolution service.

2.1.2 CUDRC has its origins in the development of the Credit Union Code of

Practice, a self-regulatory industry code of practice to which the majority of

Australian credit union subscribe.

2.1.3 The Credit Union Code of Practice (developed during the same period as

the Banking Code of Practice) established a requirement for credit unions to

make available to their members, free of charge, an external and impartial

dispute resolution system. While the Code commenced formally in 1996,

credit unions affiliated with Credit Union Services Corporation (Australia)

Limited (CUSCAL) adopted the terms and mandatory compliance with the

Code in principle at the CUSCAL Annual General Meeting in 1994.

2.1.4 As part of the adoption of the Code, CUSCAL, at the instruction of its

member credit unions, set about establishing an industry-wide professional

dispute resolution service to meet the obligations under the Code and the

EFT Code of Conduct. At the time of the adoption of the Credit Union

Code of Practice, credit unions had in place a number of separate external

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dispute resolution schemes. While the Code established mandatory

requirements for EDR services for members, the decision on how to meet

these obligations (and which scheme or service to join) remains a matter for

individual credit unions.

2.1.5 The structure of CUDRC was settled in consultation with member credit

unions, in consultation with existing dispute resolution schemes and

industry practice. The main objectives to establishing CUDRC were:

i. To satisfy the public expectation that providers of financial services

should be accountable to customers;

ii. An effective Scheme would help credit unions compete with other

providers of financial services and ensure compliance with the Code

and other regulatory requirements were effectively managed for

members; and

iii. An effective Scheme would improve practices in individual credit

unions areas where administrative reform is needed.

2.2 How CUDRC Developed

2.2.1 CUDRC (then named the Credit Union Dispute Reference Centre)

commenced operations in November 1996. The company was established

as a subsidiary of CUSCAL, with additional requirements to ensure the

requisite degree of independence in its operations and decision making

from the other operations of CUSCAL and credit unions.

2.2.2 The Directors of that company consisted of an independent Chair and four

nominated representatives of CUSCAL’s Board.

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A separate Council, comprised of an independent Chair and two

nominated positions for both representatives of the consumer movement

and the credit union sector, was established to oversee the management

and governance of the Scheme.

2.2.3 The separation of the governance responsibilities of the Board and Council

were established in the Articles of Association and Terms of Reference of

the original scheme.

2.2.4 The Board determined the Terms of Reference which defined the

jurisdiction of the Credit Union Dispute Manager. It also approved budget,

raised levies from credit unions to fund the Scheme’s operation, and

appointed the Council members.

2.2.5 The Council, however, was responsible for the operation of the CUDRC

Scheme. Its duties included establishing the annual budget, making

recommendations to the Directors in respect to the Terms of Reference,

oversaw the general operation of the Scheme and appointed the Dispute

Manager. It was not empowered to hear or determine any disputes. The

Council consisted of two credit union representatives, two consumer

representatives and an independent Chair.

2.2.7 The day to day operations of CUDRC were outsourced and managed on

behalf of CUDRC by an external professional dispute resolution service,

under formal tender processes overseen by the Council. In July 1996 the

Australian Commercial Disputes Centre successfully tendered to provide

external dispute services to CUDRC.

2.2.8 CUDRC was established under a funding formula whereby participating

credit unions contributed annual levies and separate charges for variable

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costs associated with individual disputes. This funding arrangement

continues through to CUDRC’s operations today.

2.2.9 The Scheme evolved quickly in its first year. 202 credit unions joined in the

first year, representing more than 80% of CUSCAL’s membership at the

time. CUDRC developed a focus on negotiation and conciliation in settling

disputes, reflecting the values and close member relationship of credit

unions with their members. 30 disputes were heard in the first year of

CUDRC’s operations. By 1998/99, CUDRC reported to ASIC a total of 767

disputes across 2 million accounts and 137 million transactions. 90% of

these disputes were resolved to members’ satisfaction without CUDRC

exercising its formal dispute powers.

2.2.10 From 1996 to 2000, CUDRC instituted a number of changes to its Terms of

Reference and procedures. The name of the service changed from Credit

Union Dispute Reference Centre to Credit Union Dispute Resolution Centre

(passed by SGM in February 2000 and registered in March 2000). From that

time, of course, the scheme was promoted using the new name.

2.2.11 While the majority of Australian credit unions have, since its inception,

been members of CUDRC, membership of a particular EDR scheme is not

mandated in the Credit Union Code.

As a result, several smaller dispute resolution schemes continued to operate

through the late 1990’s/early 2000 across the credit union sector.

In its annual report on Compliance with the Payments Systems Codes of

Practice and the EFT Code of Conduct, April 2000 – March 2001, for

example, ASIC noted five schemes operating across the credit union sector

as below:

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ADR Scheme/Process Number of Credit Unions CUDRC 163 Credit Union Ombudsman1 22 Endispute2 6 Both CUDRC & CUO2 2 Other (largely separately contracted)2 5

Source: ASIC Code Monitoring Report – March 2002

Over time (see ASIC Approval below) the majority of the smaller schemes

have been disbanded. CUDRC remains the main dispute services provider

to the majority of Australian credit unions.

2.3 Change in Dispute Manager

2.3.1 During 2001/2002, following a review of CUDRC’s operations and Terms

of Reference, the provision of Dispute Management services was re-

tendered and the Australian Banking Industry Ombudsman (now the

Banking and Financial Services Ombudsman) became the Manager of the

scheme from 1 September 2002 after a competitive selection process.

2.3.2 The Banking and Financial Services Ombudsman continues to provide a

dispute resolution service to CUDRC which continues to operate with

separate branding, identification, contact details and Terms of Reference,

and under a separate governance structure.

_______________________________________________________

1. The Credit Union Ombudsman is now known as the FCDRS

2. No other schemes now exist

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2.4 ASIC Approval of CUDRC

2.4.1 In 2001, the Parliament passed the Financial Services Reform Act 2001,

establishing a new regulatory, licensing and disclosure regime for financial

services providers. Under transition arrangements under FSR, existing

financial services providers were granted a transition period to March 2002

to meet the new requirements of the FSR landscape.

2.4.2 An important part of the FSR regime for Australian Financial Services

Licensees is the obligations on internal and external dispute resolution for

customers. Membership of an ASIC-approved external dispute resolution

scheme was also established as a licensing requirement for the new FSR

environment.

ASIC’s approval requirements are set out in Policy Statement 139

(Approval of External Complaints Resolution Schemes). ASIC formally

approved the CUDRC scheme on 31 August 2002.

2.4.3 A number of changes and improvements to CUDRC operations were made

during consultations on CUDRC’s approval by ASIC. A new single-tiered

governance structure, removing the separate operations of the CUDRC

Board and Council, commenced operations from 1 January 2003. A new

Board, comprised of an independent Chair, two consumer movement

representatives (appointed in consultation with peak consumer groups)

and two industry directors (appointed in consultation with participating

credit unions) was appointed.

2.4.4 The previous Chair of the CUDRC Council, the Hon Tom Waddell QC,

generously agreed to accept an invitation from the CUDRC Board to Chair

the new Board for a limited period while a new independent Chair was

appointed. The Hon Tom Waddell, in addition to extensive service and

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contribution to CUDRC, had also chaired the independent Review of the

Credit Union Code of Practice through to 2003.

2.5 Present Position

CUDRC today has 143 participating credit unions, representing 85% of the

credit union section. 29 credit unions are members of a separate ASIC

approved scheme, the Financial Co-operative Dispute Resolution Scheme.

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Chapter 3: The structure of CUDRC

3.1 The powers and role of the Manager 3.1.1 The Manager is appointed by the Board according to the Constitution of

CUDRC. To ensure independence, the Constitution requires the Manager

not to be a member or a director of the company, nor be a director or

employee of a credit union or act in a professional capacity for a credit

union.

3.1.2 The Manager’s powers are set out in the Terms of Reference of the scheme.

Under Clause 3 of the Terms of Reference, the Manager’s principal powers

and duties are to consider disputes within the Terms of Reference and to

facilitate the satisfaction, settlement or resolution of such disputes whether

by agreement, by making recommendations or determinations or by such

other means as may seem expedient.

3.1.3 The Manager’s role is further informed by the aim of the scheme, described

in clause 1.3 to be to provide an independent and prompt resolution of the

disputes described in clause 3 of the Terms of Reference having regard to

law, applicable industry codes or guidelines, good industry practice and

fairness in all the circumstances.

3.2 The structure and role of the Board 3.2.1 The corporate structure of CUDRC Pty Ltd is a company limited by the sole

shareholder of which is CUSCAL. The scheme is overseen by a Board of

Directors which has two industry representatives, two Consumers’

Directors and an independent Chairman.

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3.2.2 The Board is not involved in considering or reviewing disputes. Its

principal roles are to:

• appoint the Manager and preserve his impartiality and

independence from the members;

• manage the business of the company;

• recommend and promote consultation about proposed changes to

the Terms of Reference;

• consider and agree the budget (submitted by the Manager); and

• commission an independent review of the operations and procedures

of the scheme every three years or more frequently.

The Board also has a role in receiving and considering complaints about the

operation of the scheme, although this must not involve reviewing disputes

or decisions made by the Manager or his staff.

3.2.3 The current Board members are:

Chair:

Tom Sherman, AO

Consumers’ Directors:

Gordon Renouf and Tony Devlin

Members’ Directors:

Louise Petschler, CUSCAL and

Peter Ford, Members Education Credit Union.

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3.3 Membership of CUDRC

A current list of credit unions is available at www.CUDRC.com.au

3.4 The funding of the scheme

3.4.2 The total funding for CUDRC is provided as follows.

3.4.3 The Board of CUDRC has agreed with the Banking and Financial Services

Ombudsman Limited (BFSO) that BFSO will provide dispute resolution

services to CUDRC upon payment of an annual fee plus a charge per

written complaint received by CUDRC plus an hourly charge should a

complaint require investigation. BFSO also provides the services of the

Ombudsman as Dispute Manager.

3.4.4 The Board levies credit unions for an amount sufficient to cover the annual

fee referred to above and CUSCAL collects from credit unions and pays to

BFSO, the charges per complaint made by BFSO for dispute resolution

services.

3.4.5 BFSO meets on a cost recovery basis, the total cost of administering the

CUDRC scheme from the combination of the annual fee and the charge

made per complaint.

3.5 The people

3.5.1 BFSO provides the services of its Ombudsman as Dispute Manager, a

dedicated Case Manager for telephone queries and a Case Officer. The skill

and experience expertise of BFSO’s Legal Counsel and other Case Managers

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are available to deal with complaints or provide information to credit

unions or their members on a needs basis.

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Chapter 4: The jurisdiction of CUDRC

4.1 Introduction: the Terms of Reference of CUDRC

4.1.1 The structure and operation of the scheme and the powers and duties of the

Manager are set out in the Terms of Reference and the Constitution. The

Terms of Reference describe, amongst other things, the scheme itself and

the functions, powers and duties of the Manager.

4.1.2 The Manager in practice is able to make recommendations to the Board for

changes to the Terms of Reference. Unless the changes are minor, changes

may only be made after the Board has consulted with appropriate

individuals and organisations. The Board must consult with ASIC about all

changes, including those identified as minor.

4.1.3 Clause 5.3 of the Terms of Reference provides that the Manager must

publish dispute resolution procedures and develop guidelines for the

interpretation of these Terms of Reference and this was done to coincide

with the publication of the current Terms of Reference. The procedures are

designed to assist members, their advisers and credit unions. The

procedures may be amended from time to time.

4.2 The jurisdiction of CUDRC in summary

4.2.1 The Terms of Reference and the procedures set out and discuss the

jurisdiction of the Manager in detail and provide information additional to

that set out here. In summary, the Manager has jurisdiction to consider

disputes involving amounts of up to $100,000 brought by an individual or

small business, as defined in the Terms of Reference. That member must

have received the financial service the subject of the dispute, or have

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provided the security relevant to the financial service or whose information

is the subject of a privacy dispute. The limit applies to each separate and

unrelated claim brought by the member. The Manager also has power to

make a non-binding Recommendation involving an amount by way of

compensation in excess of $100,000.00.

4.2.2 The small business eligibility provisions of the Terms of Reference have

changed over the years of CUDRC’s operation. Therefore, different tests

are applied to determine whether a small business is eligible to lodge a

dispute, depending on the date of the events, which first gave rise to the

dispute.

4.2.3 A dispute must relate to an act or omission by a financial services provider

in relation to a financial service in Australia or in relation to confidentiality

and privacy. A dispute, broadly, is defined as a disagreement between a

credit union and a member which has not been resolved and, if the member

is an individual, a privacy issue.

4.3 Matters outside the jurisdiction of CUDRC

4.3.1 CUDRC cannot consider a dispute in a number of situations set out in

Clause 4 of the Terms of Reference. They include that the dispute:

• Relates solely to a financial services provider’s commercial

judgement in a decision about lending or security, such as

assessment of risk, the taking or release of security or a decision to

lend or not, unless the dispute involves an act or omission in breach

of a duty owed at law, including a contractual duty;

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• Relates solely to a practice or policy such as an interest rate or fee-

setting policy, unless an error is made in applying the policy or a

breach of any obligation or duty or serious misconduct is involved;

• Is or has been the subject of court proceedings or is more

appropriately dealt with by a court or in another forum, such as the

office of the Privacy Commissioner;

• Relates to events which occurred more than 6 years before the first

written notification of the dispute to the financial services provider;

• Involves a claim for more than $100,000 or a claim that is part of or

related to a larger claim involving more than $100,000.

However, the Manager may make a Recommendation in relation to

cases involving over $100,000.00. If a Recommendation is accepted

by a credit union, it becomes binding (Clause 8.5 to 8.12).

4.3.2 A court may be a more appropriate forum for a number of reasons

including that:

• Evidence from a third party not willing to cooperate in the process is

essential to the resolution of the dispute;

• The dispute is brought as a ‘fishing expedition’ to prepare for

contemplated court proceedings;

• The decision turns solely on an issue of credibility and it is more

appropriate that the evidence be given on oath and tested by cross-

examination;

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• Resolution depends upon an inquiry into and a finding as to

whether criminal conduct has taken place; or

• The dispute is more efficiently brought in conjunction with existing

or contemplated proceedings involving third parties.

4.3.3 Clause 9 of the Terms of Reference sets out a test-case procedure. A credit

union may give notice to the Manager that the dispute involves an

important or novel point of law or an issue which may have important

consequences to the business of a credit union or credit unions generally.

The credit union must undertake to pay the members costs of any

proceedings issued within six months of the notice and seek to resolve the

dispute expeditiously. On receipt of the notice and the undertakings, the

Manager must cease consideration of the dispute.

4.3.4 The Manager has the power to decide whether a dispute falls within the

Terms of Reference (Clause 4). That decision will involve consideration of

any submissions made or further information provided by the member or

the credit union. The Manager’s decision as to whether a dispute is inside

or outside of the Terms of Reference is final.

4.4 The monetary limit: its rationale, past increases and future considerations

4.4.1 CUDRC was established in 1996 with a monetary limit of $100,000, which

has not changed.

4.4.2 In 2003 and 2004, none of the cases recorded by CUDRC involved claims of

more than the monetary limit. This may reflect the fact that the monetary

limit is easily communicated and understood.

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4.4.3 For a dispute resolution scheme to be approved by ASIC and maintain

approved status it must have coverage sufficient to deal with:

• The majority of consumer complaints in the relevant industry and

the whole of the complaint; and

• Consumer complaints involving monetary limits up to a specified

maximum that is consistent with the nature, extent and value of

consumer transactions in the relevant industry [ASIC Policy

Statement 139.34].

4.4.4 In assessing a scheme’s monetary limit, ASIC will also consider:

• The nature of the complaints made to the scheme;

• The limits operated by other schemes with similar coverage; and

• The desirability of ensuring consistent coverage across schemes that

consider complaints about similar products or services, or have a

common membership. [ASIC Policy Statements 139.98 and 165.54].

4.4.5 Factors to take into account when considering the adequacy of CUDRC’s

monetary limit include:

• Increases in the size of housing and small business loans;

• Median house prices (houses are commonly the security for a

guarantee);

• Rises in the inflation index (17.9% between June quarter 1996 and

June quarter 2003);

• The Reserve Bank definition of small business lending (commercial

loans under $500,000);

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• Expansion of member categories;

• The need to ensure that retail clients under the Corporations Act are

able to access the scheme;

• Parity with other schemes; and

• Increases in jurisdiction of the lower and middle level courts

(Magistrates’ and District or County Courts).

4.4.6 The relevant amount in a CUDRC claim is the amount in dispute not the

size of the facility or the value of the product. However, where the claim is

about issues such as maladministration in the decision to lend, guarantees,

poor investment advice or negligence in arranging insurance there is likely

to be a direct relationship between the size of the facility or transaction and

the size of the claim.

4.4.7 The monetary limit for CUDRC is generally lower than the limit for other

schemes that cover similar products and services, with some exceptions. In

life insurance matters, FICS can make binding determinations of up to

$250,000. IOS can make non-binding Recommendations for amounts

between $120,000 and $290,000. BFSO can make a binding determination in

relation to any financial service for an amount up to $250,000.

4.4.8 The jurisdictional limit of the District Court of New South Wales is $750,000

in civil cases. The jurisdiction of the County Court of Victoria is $200,000 in

non-personal injury civil cases. Different considerations apply to court

jurisdictional limits. However, it is important to bear those limits in mind

when considering the monetary limit for a scheme that is intended to be an

alternative to the courts.

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4.5 Remedies available

4.5.1 A Determination of the Manager can include:

• A sum of money which does not exceed $100,000;

• Where the dispute involves a privacy issue, any other non-monetary

requirement that may be made under s 52 of the Privacy Act; and

• An order for the provision of information relating to the subject

matter of the dispute.

4.5.2 The Manager may require a credit union to pay compensation to a member

for loss or damage suffered as a result of the conduct of the financial

services provider, up to a maximum of $100,000. Compensation may take

the form of an actual cash payment or its equivalent, which may include the

reduction of a loan balance, the reconstruction of a loan or the reduction of

an interest rate on a loan.

4.5.3 Non-monetary remedies may include a determination that a contract or a

contract term is unenforceable or should not be enforced for reasons of law

or fairness. Other non-monetary remedies may form part of a negotiated

settlement. They may include refinance of a debt, the provision of a service

at a discounted rate or fee, a written apology or an acknowledgment of

error addressed, for example, to payees of wrongly dishonoured cheques.

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Chapter 5: Dispute Resolution and decision-making processes

5.1 Accessing CUDRC 5.1.1 Members in dispute with a credit union can contact CUDRC:

• By telephone using the Financial Ombudsman Service (FOS) shared

telephone service: 1300 78 08 08 or TTY

(03) 9613 7344;

• By fax: (03) 9620 4446

• By writing: to GPO Box 3, Melbourne VIC 3001

Such contact arises normally when a member of a credit union finds

himself/herself in dispute with a credit union and, having attempted to

resolve that dispute with the credit union or the internal dispute resolution

mechanism of that credit union, makes contact with CUDRC usually upon

referral by the credit union but sometimes as a result of a recommendation

being made by a financial counsellor, Community Legal Centre or other

organisation which might have been consulted by the member.

5.1.2 FOS is a co-operative venture between BFSO, Financial Industry

Complaints Service Limited and Insurance Ombudsman Limited. It

provides customers with a single access number for assistance with

enquiries covered by those three schemes and also CUDRC, the Credit

Ombudsman Service Limited, formerly the Mortgage Industry

Ombudsman, the Superannuation Complaints Tribunal and the Insurance

Brokers’ Dispute Scheme.

5.1.3 The CUDRC website does not provide an online dispute lodgement service.

In practice, BFSO allows members to submit a dispute directly to a web

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server via a secure encrypted area, which is used when CUDRC is asked to

facilitate lodgement of a dispute by such a method.

5.1.4 A TTY number allows callers with a speech or hearing impediment to

converse via text. An interpreting service is available for callers whose first

language is not English and arrangements can be made for written material

to be translated so that members can send correspondence to CUDRC in

their first language. Both services are used by callers, and are thought to be

an important initiative enabling all those who wish to use CUDRC to do so.

The CUDRC brochure is available on the website.

5.1.5 When a person first telephones CUDRC, the case officer answering the call

will assess whether the dispute is likely to fall within CUDRC’s jurisdiction

and if not will refer the caller to other organisations that may be able to

assist. The case officer will encourage the caller to contact the credit union

direct to try to resolve the dispute. The case officer provides the contact

details of the area nominated by the credit union to deal with customer

disputes. If the dispute appears to be within CUDRC’s jurisdiction,

CUDRC’s postal details are also provided so that the caller can lodge a

dispute if they are unable to resolve it with the credit union.

5.1.6 As an FSR requirement, licensees are required to provide details of their

external dispute resolution scheme to customers. That information is

generally provided in written material concerning disputes made available

by credit unions to members, on credit union websites and orally by credit

union employees to members.

5.1.7 If a member is unable to lodge a written dispute the case officer will take

the details of the dispute over the telephone and will then send a written

record of the dispute for them to verify and sign. Members can also

authorise an agent to bring the dispute and communicate on their behalf

26

with CUDRC and the member. The agent may be a friend, family member,

financial counsellor or other professional adviser.

5.2 After receipt of a written dispute 5.2.1 When a dispute is received the details of it are entered on to CUDRC’s

Case Information Management System (CIMS) (see Chapter 8 for more

information about CIMS and other systems). Information recorded is:

• Case number;

• Member name address and contact numbers;

• Credit Union complained about;

• Short summary of the dispute;

• The amount claimed;

• Product code(s) for the product(s) complained about; and

• Problem code(s) for the problem(s) complained about.

5.2.2. The case officer then assesses whether the dispute is within the Terms of

Reference and seeks advice from legal counsel if necessary. If it is not

within the Terms of Reference, CUDRC writes to the member explaining

why it is not within jurisdiction. Appropriate contact details are also

provided so that the member can pursue the dispute directly with the credit

union or contact any other relevant agency or organisation that may be able

to assist. However, the member is given the opportunity to respond to a

letter saying that a dispute is outside CUDRC’s Terms of Reference. A

member can then respond by establishing that the matter is within

jurisdiction, for example, by clarifying the nature of the dispute or the

amount claimed.

5.2.3 If the dispute appears to be within jurisdiction, the case officer will write to

the member acknowledging receipt of the dispute and explaining the

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dispute resolution steps. The letter will enclose a brochure which explains

the CUDRC procedures, the CUDRC Privacy brochure and an authorisation

form which the member must sign and return to CUDRC. This form

enables CUDRC to obtain information from and disclose information to the

credit union. An authorisation form is also sent if the member wishes to

bring the dispute through an agent. The case officer will also write to the

credit union to give it the opportunity to resolve the dispute before further

consideration by CUDRC.

5.2.4 If the dispute is from a small business, the case officer will also ask the

business to sign a small business declaration and authority form which will

enable an assessment to be made of whether the business is an eligible

small business and will also identify the person authorised to discuss and

resolve the dispute on behalf of the business.

5.2.5 If the dispute is from an individual and relates to an alleged breach of

privacy, the member will be made aware of the option of referring the

dispute to the Privacy Commissioner.

5.3 Stages of Resolution: referral to and response by the member

5.3.1 The credit union has 30 days in which to either resolve the dispute or

provide a response to CUDRC addressing the issues raised by the dispute

and providing any documents that are relevant to the dispute. An

extension may be sought but reasons must be provided.

5.3.2 There may also be exceptional circumstances where an earlier response or

the fast tracking of the dispute generally will be required such as where the

sale of a security property is imminent or the health of the member

warrants a faster response.

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5.3.3 The credit union must write to CUDRC with a response that confirms the

outcome of its review of the dispute. The response will either be

notification that the dispute has been settled with a copy of correspondence

sent to the member or notification that the dispute has not been settled with

details of the credit union’s position.

5.3.4 If it appears to the case officer that the credit union’s response may have

resolved the dispute, the case officer writes to the member asking whether

the response has resolved the dispute and if not asks the member to explain

why they are not satisfied and provide any new or relevant information for

consideration. If it then appears that the matter, although not resolved,

may be able to be resolved fairly quickly, the case officer will refer the

member’s reply to the member for further consideration and may discuss

the prospects for resolution with the member and the credit union. During

this stage, as at all other stages, the member and the credit union are

encouraged to seek to resolve the dispute with or without the assistance of

CUDRC.

5.4 Stages of Resolution: Investigation

5.4.1 Where a case remains unresolved after it has been referred to the credit

union and the credit union has responded, the case will move into the

investigation process. In the twelve month period to 31/3/2005, 19.3% of

cases found to be within Terms of Reference were investigated.

5.4.2 When a case manager commences their investigation they will telephone or

write to the member and the credit union to:

• Outline their understanding of the dispute as put by the member

and the credit union’s response and asking for correction of any

misunderstanding of either the dispute or the credit union’s

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response;

• Set out the legal, industry practice or factual issues they will be

addressing in the investigation; and

• Request any further information necessary for the assessment of the

dispute.

5.4.3 After the case manager has received the requested information, there are

several ways in which the dispute may be resolved.

5.4.4 Negotiated Settlement

At all stages of a dispute it is open to the parties to negotiate a settlement of

the dispute. The case manager will often facilitate a settlement by acting as

a conduit between the parties. If a resolution is reached the terms of the

settlement are set out in a Confirmation of Settlement form which is signed

by the member and sent to the credit union. Sometimes the credit union

will also require an additional Release and Indemnity. Members are

encouraged to seek independent legal advice before signing either of these

documents. In the year to 31/3/2005, a settlement was negotiated in 57

cases. (51.4% of the cases received which were within Terms of Reference).

5.4.5 Conciliation Conference

At any stage a case may be referred to a conciliation conference with the

Manager or with the case manager. This can be done at the suggestion of

the case manager or at the request of the member or the credit union. The

conference is arranged at a location geographically convenient to the

member, so in practice conciliation conferences could be held all over

Australia. The member may attend alone or with a person that they trust

and a legal representative may accompany them. The credit union must be

represented by an officer with knowledge of the case and authority to settle

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it and may also have legal representation, if the member is legally

represented. If a resolution is reached the Heads of Agreement are

recorded and a Confirmation of Settlement form will be sent subsequently

to the member to sign. Members are encouraged to obtain independent

legal advice before signing the Confirmation of Settlement and any other

related documents. In the year to 31/3/2005, three cases were discussed at

a conciliation conference.

5.4.6 Finding

If the case is not resolved during the investigation process, the case

manager will write a Finding. The majority of cases referred to

investigation result in a Finding, which is a written decision on the merits,

with reasons. A Finding includes:

• A summary of the dispute;

• A summary of the issues raised by the dispute;

• The case manager’s analysis of the information, any applicable legal

principles, any relevant codes, the relevant standard of industry

practice and fairness; and

• The case manager’s conclusions about the merits of the dispute and

how it should be resolved.

5.4.7 The Finding is sent to both the member and the credit union. Any

documents relied upon in the Finding will either be available to the parties

on request or attached to the Finding. Both parties have 30 days in which to

accept or reject the Finding, providing reasons for any rejection.

Acceptance is acknowledged by the signing of a Confirmation of Settlement

form by the member (in cases where the Finding recommends the payment

of money or other compensation to the member). Members are encouraged

to seek independent legal advice if they have any concerns.

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5.4.8 Most Findings are subject to a quality assessment process. This involves a

review of the draft by legal counsel, the general manager or a senior case

manager, who will check the Finding to ensure that it identifies and

addresses the relevant issues, gives appropriate weight to relevant

information and is clear.

5.5 Stages of resolution: Determination

5.5.1 A party rejecting a Finding must provide reasons which may include the

following:

• There is some fact or matter relied upon in the Finding which is

incorrect, including information provided by the other party;

• There is additional relevant information which may change the

Finding;

• The analysis of the applicable law is incorrect; or

• Insufficient weight has been given to particular information.

5.5.2 The Manager must notify the parties of his intention to issue a

Determination. Either party is free to make further submissions about the

matters in dispute and has 30 days to do so.

5.5.3 If a Finding is rejected and the dispute is not otherwise resolved, the

Manager will provide a Determination. This is a written decision with

reasons taking into account the Finding, matters raised by either party in

response to the Finding or the other party’s reasons for rejecting it, and any

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required legal or industry practice advice.

5.5.4 The Determination is sent to both parties. If the member rejects the

Determination, there is no further right of appeal and the member must

pursue the dispute elsewhere. The credit union is bound by the

Determination.

5.6 Procedural fairness in practice

5.6.1 The procedures of CUDRC are designed to ensure that the parties are given

a reasonable opportunity to present their case and to have an independent

decision provided in writing, with reasons, and logical analysis based on

relevant information. Written reasons will clearly identify the documents

or information relied upon, which will be annexed, sent to the parties, be

available on request or clearly summarised in the decision. If a party

requests that information be kept confidential from the other party it will

not be able to be relied upon in a decision adverse to the other party (see

Clause 5.9 of the Terms of Reference).

5.6.2 The investigation process is inquisitorial. This means that the case

managers and the Manager ask questions of the parties and require

information from them. This is done in the context of a letter sent to both

parties at the commencement of the investigation setting out a summary of

the dispute and the credit union’s response and the issues identified as

relevant. The letter gives both parties the opportunity to correct the

summary of the dispute and provide further relevant information.

5.6.3 Both parties may appeal the Finding and provide any new or additional

relevant information, which is considered before the issue of a

Determination by the Manager.

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5.6.4 The quality assessment process, described in 5.4.8, is designed to ensure

that all relevant information is taken into account in reaching a decision,

and is given its appropriate weight, and the decision is properly made on

the balance of probabilities. The Manager is not bound by the rules of

evidence and may consider information provided by either party. It is

important, therefore, to ensure that such information is given its

appropriate weight.

5.6.5 There is an expectation that parties will participate in the process in good

faith. In addition, clauses 5.5 and 5.6 of the Terms of Reference allow the

Manager to require a credit union to provide any information the Manager

considers relevant to a dispute and require the credit union to comply with

such a request as soon as reasonably practicable except where:

• to do so would be in breach of a duty of confidentiality owed to a

third party; and

• the credit union has used its best endeavours to obtain consent to

disclosure.

In addition, if legal professional privilege applies to documents CUDRC

will not compel their disclosure.

5.7 Fairness in outcomes

5.7.1 How is independence of mind maintained when a scheme is funded by

industry? This is a question that is raised by some members and their

representatives and reflects a legitimate concern with ensuring that the

processes and outcomes of EDR schemes such as CUDRC are fair. In the

case of CUDRC, a number of structural and procedural factors operate to

34

ensure that the Manager and his staff are able to make independent

decisions and are supported in maintaining independence:

35

• The Manager is appointed by and answerable to a Board, with equal

representation of industry and consumer directors and an

independent Chairman;

• The staff, whilst employed by BFSO, are answerable to the Manager

not to credit unions. The Board does not and cannot interfere in

decisions about individual cases made by the Manager or his staff;

• CUDRC is also accountable to ASIC, which is an independent

government agency, as well as being generally accountable to the

Australian community;

• Quality and fairness in decision-making are assisted by the quality

assessment processes of CUDRC;

• Decisions about changes to the Terms of Reference are the subject of

consultation with government, industry and consumer

representatives;

• The policies, procedures and operations of the scheme are

transparent and information about them is available on the web site

Case studies are published in the Annual Report and from time to

time in the Bulletins issued by the scheme; and

• All staff involved in decision-making receive training in the

principles of natural justice and their application. Independence is

reinforced by the Manager and by the culture of the organisation.

Staff are supported in asserting independence where necessary.

The Board receives copies of Determinations made by the Manager.

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Chapter 6: Raising Standards: Ancillary roles of an EDR scheme

6.1 Identifying and resolving systemic issues 6.1.1 CUDRC Terms of Reference (Clause 12), and ASIC Policy Statement 139,

require CUDRC to identify systemic issues and serious misconduct, obtain

a response from the relevant credit union and report to ASIC.

6.1.2 In broad terms, a systemic issue is an issue, which will have a material

effect on a class of individuals or small business beyond the parties to the

dispute. Serious misconduct is conduct that may be fraudulent, grossly

negligent or involve wilful breaches of applicable laws.

6.1.3 Examples of systemic problems might be:

• Inadequate or misleading disclosure in documents given to

customers relating to a particular product or service;

• Application of an undisclosed or inadequately disclosed fee or

charge to members’ accounts or application of a fee in breach of the

Consumer Credit Code;

• Breaches of privacy affecting a group of members caused by system

malfunction or human error.

6.1.4 Examples of serious misconduct might be:

• Repeated failure to comply with the credit union’s obligations to

CUDRC or to comply with a relevant Code or law.

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• Unwarranted threats or seriously inappropriate behaviour towards a

member.

6.1.5 Systemic issues are identified as early as possible and:

• Recorded in the systemic issues register by the CUDRC Systemic

Issues Manager as possible systemic issues;

• Notified to staff so that they can identify cases raising the issue;

• Referred to the credit union for a response, including information

necessary to determine whether a systemic issue in fact exists and, if

so, what solution is proposed to rectify the issue and identify and

compensate affected customers;

• If confirmed as a systemic issue, a ‘notable case code’ is created on

the CUDRC case management database for all cases which raise the

issue;

• Discussed with the credit union with the aim of resolving the issue,

including any necessary system or training changes; identification

and compensation of affected members, including any necessary

advertising; communication with affected members about the issue;

and a timeframe for implementation.

6.1.6 Systemic issues’ reporting is described below. Rectification of a systemic

issue will of course minimise the risk of a class action or regulatory action

but the process and its benefits in terms of member satisfaction and the

maintenance of trust appear to be well understood by credit unions.

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6.1.7 Whilst a small number (3) of possible systemic issues have been identified

by the Manager since 1 September 2003, only one of which turned out to be

an issue which was reported to ASIC, but the Manager confirmed that it

had been dealt with to his satisfaction.

6.2 Member and external education 6.2.1 CUDRC contributes to the education of credit unions about issues raised in

disputes and dispute resolution processes in a number of ways.

6.2.2 The Manager and his Case Manager, Legal Counsel and EFT Team Leader

make presentations to and conduct training workshops with credit union

staff on a regular basis on issues such as the EFT Code, the procedures and

processes of CUDRC and other relevant issues as they arise.

6.2.3 Since 2002 CUDRC has published Bulletins which are addressed to all

credit unions and other interested stakeholders or observers and are

available on www.cudrc.com.au

6.2.4 Guidelines to the CUDRC Terms of Reference are available on its website

and, in practice, the BFSO Policies and Procedures Manual, which is

available on its website, contains an explanation of the procedures as well

as the policies followed by CUDRC in relation to particular types of

disputes which frequently arise in the financial services sector. They

provide commentary on the legal principles and industry practice issues

that apply to those disputes and may set out the questions that will be

asked in an investigation. The policies are designed to alert both members

and credit unions to the approach that will be applied to particular kinds of

disputes to encourage the parties to resolve the issue without necessarily

involving CUDRC. They also assist transparency and consistency in the

decision-making processes.

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Chapter 7: Systems, Data Collection and Reporting

7.1 The use of technology in the CUDRC processes

7.1.1 CUDRC uses the purpose built Case Information Management System

(CIMS) to log and track all telephone enquiries and written disputes. The

CIMS application has been continually developed and improved since 1990,

when it was developed for BFSO.

7.1.2 In 2000, CIMS was rebuilt on a commercially available database engine. By

using a commercially available database in which to store the data, BFSO is

able to use sophisticated ‘off-the-shelf’ reporting tools to provide both

external stakeholder reporting and internal management reporting. The

same system is used by CUDRC.

7.1.3 Given the management by BFSO of CUDRC’s affairs, CUDRC uses the

BFSO telephone systems which are based on a Nortel Meridian Option 11

PABX. The PABX has an integrated Automatic Call Distribution function

(ACD) and a Voice Mail service. ACD queues are managed via the Avotus

Control Centre software package. Incoming calls are distributed to CUDRC

via the Financial Ombudsman Service Call Centre (“FOS”) described above

(5.1.2).

7.1.4 Calls are transferred to the CUDRC enquiries queue by the FOS staff. If

case officers are on other calls, callers receive an on-hold message via the

telephone system message service (Miran). Appropriate messages are

provided to callers at designated intervals.

7.1.5 Online subscription research resources and selected Internet sites are

available to all staff from their desktop computers and are used not only for

40

research on cases but also by case managers to enable appropriate and

accurate referral information to be provided while on the telephone to

callers. For security reasons, general Internet access is limited to one PC

located in the library. A Lotus Notes based Knowledge Management

System has been developed and was implemented in May 2004. Use of

technology is subject to an e-mail, telephone and Internet policy document

that was developed in consultation with staff.

7.2 Collecting and recording of case information

7.2.1 All telephone enquiries received by CUDRC case officers are logged into

CIMS, recording the following data:

• Basic demographics of the caller (gender, postcode, whether member

is an individual or a small business);

• Name of credit union being complained about;

• The financial product category being complained about and the

problem category raised;

• How the caller found out about the scheme.

7.2.2 All written disputes are entered into CIMS. CUDRC records the following

addition information for written disputes:

• Name and address;

• A summary of the issues raised by the member;

• Amount of compensation sought (and at the closure of the file the

amount of any compensation paid, if known);

• Detailed codes for each product/problem combination raised by the

member;

• Details of any systemic issue raised by the dispute; and

41

• Details of any alleged breach of the Code of Practice.

7.2.3 In addition to the above core information, CIMS also provides diary

recording of contact with the parties, actions taken or requested, or action

to be taken at a future date. CIMS records the relevant dates and the

current status of the case; and facilitates the generation of all outbound

correspondence by connecting with a set of standard letter templates.

7.2.4 Status codes record where the case is in the process and the level of

complexity of the case and facilitate the monitoring of time performance

targets for each stage. Problem and product codes enable the relative

proportion of disputes about particular products and problems to be

identified.

7.2.5 Case officers and managers also record keywords for cases describing the

legal or industry practice issues raised. Keyword searches can be made by

staff to find other cases raising similar issues and to facilitate consistency of

approach and the efficient use of legal or industry practice advice.

7.3 Reporting to stakeholders and the public

7.3.1 Credit unions can obtain regular reports on the number and status of all

cases received.

A more extensive statistical summary is provided to each credit union

annually.

A quarterly report is provided on the CUDRC website.

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7.3.2 To management and staff:

• Monthly Summary Statistics for Open, Provisional and Closed cases

at the different levels, including performance against Key

Performance Indicators (KPIs – see 7.5.1). Some reports are run on a

daily basis to enable close supervision by management of selected

KPIs. The Monthly Summary Statistics reports are provided to all

staff;

• Separate reports for individual case officers and case managers are

produced to enable management of individual staff performances.

Each case officer and case manager is provided with their own

statistical summary, which includes some comparative data to

enable them to benchmark against their peers;

• Exception reporting is regularly undertaken to ensure that any

anomaly in case processing is identified early.

7.3.3 To the Board of CUDRC:

A statistical summary is provided to all Board members prior to each

quarterly meeting, accompanied by an explanatory memorandum.

7.3.4 To ASIC:

ASIC receives a quarterly statistical summary report and a quarterly

systemic issues report (referred to in more detail in 8.6).

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7.3.5 To external stakeholders and the public:

CUDRC publishes an Annual Report, also available on its website, which

includes extensive statistical and prior year comparative information

covering such matters as:

• demographics of users;

• analysis of telephone calls received;

• new cases received;

• outcome of closed cases and relative levels of closed cases;

• case resolution times;

• analysis of products and problems; and

• disputes outside the Terms of Reference.

The Annual Report also contains illustrative case studies and a summary of

systemic issues with case studies.

7.3.6 Statistical information is also regularly provided to other interested parties

(for example, consumer groups).

7.3.7 Copies of reports made to the Board of CUDRC and credit unions will be

made available to the consultant appointed to conduct the Review.

7.4 Monitoring members’ compliance

7.4.2 To ensure credit unions comply with their obligations to the scheme and to

enable exceptions to be addressed promptly, an automated follow-up diary

system is integrated into CIMS which case officers and case managers use

44

to follow up any response that has not been received by the due date.

7.4.3 The Manager and Case Manager will also follow up with members any

issues or anomalies that appear in the statistical information reports. These

discussions may also include observations about patterns of problems with

particular products or areas of the credit union which have come up at case

officers or case managers regular meetings.

7.5 Performance targets

7.5.2 CUDRC has implemented the following case management KPIs. They are

reviewed regularly to ensure they remain relevant:

• 95% of all cases received to be processed within 7 days;

• 90% of cases identified for investigation to be allocated to a case

manager within 60 days; and

• 90% of all cases to be finalised within 120 days.

7.6 Recording and reporting systemic issues

7.6.2 The identification and resolution of systemic issues is described in 7.1

above. Systemic issues are recorded in two places - the systemic issues

register maintained by the Systemic Issues Manager and by use of the

systemic issues code in the CIMS record of individual cases in which a

systemic issue is raised. A systemic issues code is created for each systemic

issue identified to enable cases raising the same issue to be identified and

monitored as part of the resolution of the particular systemic issue.

7.6.3 The obligation to report to ASIC is an obligation to report all satisfactorily

resolved and rectified systemic issues without identifying the credit union

45

but including the nature of the issue and the numbers of instances involved.

In the case of unresolved issues where the credit union has failed to

respond adequately and has been given 10 days notice, CUDRC must

report the identity of the member, the details of the issue, the action taken

by CUDRC and the response by the credit union.

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Chapter 8: Future planning for the Board of CUDRC

8.1 Issues for the future

8.1.1 CUDRC has now been in operation for nine years. It has been approved as

an external dispute resolution service by ASIC within the framework of the

regulation of financial services providers. It has engaged in a regular

process of internal and external review of its operations and procedures,

including the current review, and has evolved both in its jurisdiction and its

processes.

8.1.2 The current review is focussed on the extent to which the operations and

procedures of the scheme are meeting the criteria set out in ASIC Policy

Statement 139. As such it is part of a process of continual review and

improvement undertaken by the Board.

8.1.3 The issues for consideration by the Board include:

• Procedural or structural changes required to accommodate the

extension of the scheme to non-credit union, financial services

providers.

• Strategies for increasing awareness and understanding of the work

of CUDRC.

• The question of whether CUDRC should remain as a stand alone

scheme, managed by BFSO or should adopt some other strategy.

• The potential for greater use of online dispute resolution techniques.

47

• Reviewing the range of services provided and considering what

other services might usefully be provided to credit unions and the

community that are consistent with the independence of CUDRC.

• The potential for and desirability of changes to the monetary limit

and coverage of the scheme.

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Links for further information Credit Union Dispute Resolution Centre: www.cudrc.com.au (The CUDRC Terms of Reference are available on the CUDRC website.) Australian Securities and Investments Commission (for Policy Statement 139 follow links to Financial Services Reform publications and then policy statements): www.asic.gov.au Benchmarks for Industry-based Customer Dispute Resolution, Consumer Affairs Division, Department of Industry, Science and Tourism: www.selfregulation.gov.au/resources.asp Code of Banking Practice: www.bankers.asn.au National Alternative Dispute Resolution Advisory Council: www.nadrac.gov.au Other external dispute resolution schemes in the financial services sector: Banking and Financial Services Ombudsman: www.bfso.org.au Credit Ombudsman Service Ltd: www.creditombudsman.com.au Financial Co-operative Dispute Resolution Scheme: www.fcdrs.org.au Financial Industry Complaints Service Ltd: www.fics.asn.au Insurance Brokers Disputes Ltd: www.ibdltd.com.au Insurance Ombudsman Service: www.insuranceombudsman.com.au Superannuation Complaints Tribunal www.sct.gov.au UK Financial Services Ombudsman: www.financial-ombudsman.org.uk Canada Ombudsman for Banking Services and Investments: www.obsi.ca

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Appendix 1: ASIC Policy Statement 139.151 The benchmarks and their underlying principles 1 Accessibility The scheme makes itself readily available to customers by promoting knowledge of its existence, being easy to use and having no cost barriers. 2 Independence The decision-making process and administration of the scheme are independent from scheme members. 3 Fairness The scheme produces decisions which are fair and seen to be fair by observing the principles of procedural fairness, by making decisions on the information before it and by having specific criteria upon which its decisions are based. 4 Accountability The scheme publicly accounts for its operations by publishing its determinations and information about complaints and highlighting any systemic industry problems. 5 Efficiency The scheme operates efficiently by keeping track of complaints, ensuring complaints are dealt with by the appropriate process or forum and regularly reviewing its performance. 6 Effectiveness The scheme is effective by having appropriate and comprehensive terms of reference and periodic independent reviews of its performance.

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