Consumers stand to benefit from new guidelines for dispute resolution schemes released by the Australian Securities and Investment Commission.
The changes coincide with the release of the draft legislation contained in the National Consumer Credit Protection Act which will require all brokers to belong to an external dispute resolution scheme in order to obtain a licence.
ASIC revised the guidelines to make all EDR forums able to hear cases up to the value of $500,000. The maximum amount EDRs will be able to award is $280,000 or $150,000 if the claims relate to insurance brokers.
EDR schemes will also be able to award interest in addition to compensation awards.
Currently, EDR scheme rules bar a complaint involving more than the applicable compensation limit.
'The increase in claim limits and compensation caps in EDR schemes will ensure that many more consumers and retail investors will be able to bring their claims to EDR schemes, avoiding the expense of litigation. We think this is a big improvement,' said Jeremy Cooper, ASIC's Deputy Chairman.
Senator Nick Sherry, Minister for Superannuation and Corporate Law said 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," Sherry said.
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.
Read the complete list of changes here.
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