Gadens Lawyers’ Jon Denovan has rubbished claims that EDR schemes are 'unfair', saying in many cases members are holding up their own decisions.
Responding to widespread industry complaints over the time taken to resolve disputes under the EDR system, Denovan defended the schemes, saying members are as much to blame for delays.
"Surprisingly, often the greatest delays in resolving a dispute are members who fail to respond promptly, and then proceed to complain that EDR is slow," Denovan said.
"Given a fair chance, my observation is that in the vast majority of circumstances, EDR can work well,” he said.
Denovan said the mortgage industry needed to do a better job in publicising IDR schemes to consumers to mitigate the number of disputes sent to EDRs.
Matthew Bransgrove of Bransgrove’s Lawyers previously told Australian Broker EDR schemes unfairly remove jurisdiction from the hands of courts, calling the power afforded to EDRs such as COSL and FOS “arbitrary”, and warning that they could cause "rank injustice".
However Denovan, who is himself a COSL director, dismissed the claims.
“Compulsory EDR arises because in some states and territories there was already access to other courts and tribunals prior to the introduction of the NCC. Under that regime, consumers were able to air their complaints comparatively easily and cheaply. To a certain extent, EDR was created to replace these other courts and tribunals. EDR is clear government policy, and when working well, it can benefit both members and consumers,” Denovan said.
Denovan said EDR schemes did not usurp the power of the courts, but rather replaced state-based tribunals. He said EDRs could resolve disputes “faster and more cheaply” than courts.
Denovan did concede that EDRs may have too much power to vary credit contracts for hardship cases.
“Generally, EDR staff are not trained in credit assessment and may not understand the risk and financial consequences to the lender of a contract being varied. The ease with which a written contract can be varied for hardship is a significant credit and commercial risk for financiers. Perhaps the answer is to limit EDR’s review of hardship decisions to cases where there has been no fair review by the lender,” he said.
'Arbitrary' EDR power could cause 'rank injustice'