O'Shea, Paul --- "Underneath the Radar: The Largely Unnoticed Phenomenon of Industry Based Consumer Dispute Resolution Schemes in Australia" [2004] UQLRS 2; (2004) 15 (3) Australian Dispute Resolution Journal 156-169

Last Updated: 8 January 2009

THE UNIVERSITY OF QUEENSLAND

LEGAL RESEARCH SERIES

This article was originally published in the Australian Dispute Resolution Journal

O'Shea, P, 'Underneath the Radar: The Largely Unnoticed Phenomenon of Industry Based Consumer Dispute Resolute Schemes in Australia' (2004) 15 (3) Australian Dispute Resolution Journal 156-169

“Underneath the Radar: The Largely Unnoticed Phenomenon of Industry Based Consumer Dispute Resolution Schemes in Australia”

Paul O’Shea

Abstract

There has been a substantial growth in the jurisdiction, size and complaints handling activities of industry based consumer dispute resolution schemes in Australia particularly in the areas of financial services and telecommunications. Increasingly, the schemes have statutory recognition and, in publishing reasons for determinations, are potentially contributing to the development of the law in their relevant areas. This contribution and the regulatory role of the schemes within the Australian legal system present interesting and novel questions for lawyers both practising and academic. Despite this, they have received little attention in academic or professional journals and what has been written has failed, thus far, to substantially address these questions.

Introduction

The last ten years have seen a growth in the number and size of industry based consumer dispute resolution schemes in Australia. This is particularly so in the areas of financial services and telecommunications. Most Australians would be familiar with the Australian Banking Industry Ombudsman (ABIO) now the Banking and Financial Services Ombudsman (BFSO), name, although not so many would be aware that similar schemes now exist for credit unions, building societies, insurance companies, financial planners and advisers, insurance brokers, managed investments schemes and the timeshare industry.

This development is significant not only as an economic or social phenomenon but because it presents new challenges for lawyers in their understanding of the resolution of civil disputes. Alternative Dispute Resolution is usually taken to mean mediation and conciliation with some reference to commercial arbitration. The latter is governed by quite specific legislation and rules of law.

The industry based consumer dispute resolution schemes do utilise the non-adjudicative means of resolving disputes but they are primarily arbitrators. They are not, however, commercial arbitration in the sense commonly understood by most practitioners.

In determining disputes between service providers and their customers, the schemes are making decisions about substantive and complex areas of law including contracts generally, and insurance and banking and finance in particular. Many publish their reasons for determination and this may well have the effect of influencing perceptions of the law in these areas if not the development of the law itself.

A related question is that of possible rights of review of scheme decisions by dissatisfied members, or for that matter, consumers. This goes to the heart of whether the schemes are essentially private or public bodies or a hybrid of both. The schemes are characterised by a variety of structures and dispute resolution methods. .

The Phenomenon - Size and Growth

The size and rapid growth of the schemes render them significant and interesting. The BFSO has a membership of 25 banks which represents all of the major banking institutions in Australia[1] and the Insurance Enquiries and Complaints Ltd (IEC)[2] has over 60 insurer members giving it over 95% coverage of the insurance industry.[3] The Telecommunications Industry Ombudsman (TIO) has 963 members, 757 of those being internet service providers.[4] 1,766 life and re-insurers, managed investment funds, brokers and financial advisors were members of Finance Industry Complaints Service (FICS) as at October 2002.[5] The new FCDRS had an initial membership of 43 credit unions and building societies, which has recently expanded to include Australia’s largest credit union, Credit Union Australia.[6] The Insurance Brokers Dispute Scheme (now Insurance Brokers Disputes Limited or IBD) claimed 82% of all registered brokers in Australia as its members in 2001.[7]

The schemes handle many thousands of consumer complaints each year. Last year, the TIO received 62, 275 complaints[8] and the BFSO received 65,000 calls which led to 7,992 cases.[9] In the same year, the IEC received 75, 487 enquiries which led to 11, 252 cases being referred for determination.[10] In 2001, FICS dealt with 10, 632 enquiries which led to 3,481 complaints.[11] In the same year, IBD received 3,288 telephone complaints and 195 complaints in writing and the FCDRS, in 2002 received 3,000 inquiries which led to 23 formal complaints for determination.[12]

The Phenomenon - An Expanding Jurisdiction

The monetary values of the disputes being handled by these schemes are by no means trivial. The BFSO can determine disputes where the amount claimed is up to $150,000[13] and the IEC for claims up to $120,000. FICS can determine disputes for life insurance complaints up to $250,000 and $100,000 for other complaints.[14] The TIO can make decisions binding on the service provider up to $10,000 and recommendations up to $50,000.[15] The IBD can make determinations up to a value of $50,000 and more; if the broker waives the limitation[16], the FCDRS monetary limit is $100,000 per claim.[17]

All of the schemes are no longer confined to consumer complaints and include small business. Since 1998, the BFSO can resolve disputes involving a small business, which is defined as having 100 employees or less if it is in the business of manufacturing and 20 employees or less if it is any other business.[18] The IBD uses the same definition though its jurisdiction is complicated by the exclusion of certain types of insurance products.[19] The IEC can receive complaints from small business but defines that term more narrowly to those which have 5 employees or less and a turnover of $400,000 per year or less.[20]

Small businesses have always been able to access the TIO since its inception in 1993 and although these are defined has having 20 employees or less, “the TIO takes a flexible approach and may exercise its discretion to investigate complaints by businesses that do not satisfy this definition. In doing so, the TIO has regard to the following factors:

• the number of employees;
• the amount in dispute;
• the issue in dispute; and
• whether the TIO's timeframes for resolution will suit the complaint.”[21]

FICS Rules provide that only “retail investors” may access the service and adopts the meaning of this term in the Corporations Act 2001 (Cth) which is essentially that the investor is not a “professional investor” and that the value of the product was $500,000 or less.[22]

Likewise the FCDRS now has a limited jurisdiction for small business.

The Phenomenon in a Legal Context– Statutory Recognition

The schemes are, increasingly, receiving statutory recognition and are themselves the subject of regulation.

The Financial Services Reform Act 2000 (Cth) (FSR Act) introduced as part of the Corporate Law Economic Reform Package (CLERP) places as a condition of holding an Australian Financial Services Licence, the membership of a dispute resolution scheme approved by the Australian Securities and Investment Commission (ASIC). ASIC has developed a detailed policy, PS139 on the requirements for such approval and several schemes have received it, e.g. Australian Banking Industry Ombudsman (BFSO), the Financial Services Complaints Service (FICS) and Insurance Enquiries and Complaints Ltd (IEC). Although some of the schemes now seeking approval can trace their antecedents prior to the FSR Act, the development of several industry schemes can be directly attributed to the new statutory requirements which became effective in March 2004 e.g. in the timeshare industry.

The TIO was the subject of legislation from its inception becoming increasingly more entrenched with each wave of reform of the telecommunications industry. Most recently, the TIO is statutorily empowered to resolve disputes between providers of telecommunications services and their consumers under the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth).

Theoretical and Legal Issues- What are they?

Some new and developing socio-economic phenomenons warrant more than mere observation and description. The existence, structure and operation of the schemes raise several interesting theoretical and legal issues.

It must be remembered that scheme determinations and decisions are binding on the industry member and not on the consumer. Consumers still retain their rights under the law relevant to the transaction which is the subject of their complaint. This is a requirement of PS139[23] and was, in any case, the position for the large schemes established prior to the FSR Act of 1999.[24]

As they are not courts nor tribunals established entirely by statute, at first glance, they would appear to be private or domestic tribunals with the origin of their power being contractual between the members and rights of review being confined to those for such bodies, namely declarations and injunctions for breach of “natural justice.”[25]

Alternatively, depending on the model of incorporation, actions may lie in contract or under the Corporations Law or under the respective associations incorporation statute of the relevant state.[26] This requires some further examination. Do the schemes have a duty of care in tort and, if so, what is the content of such a duty and is it owed to the industry members or to consumers as well?

The schemes are, however, not merely sporting or social clubs but groups with the power to determine substantial property rights a factor which has informed the view of the courts as to what amounts to natural justice in such circumstances.[27] A factor which differentiates the schemes from other private or domestic tribunals is that they have been formed solely for the purpose of resolving disputes and while they often bear a relationship, either currently structural or merely historical, with an existing industry association, they are independent from that association. This independence is now a requirement of approval by ASIC.[28]

Another feature which bears examination, is the expressed, rather than implied, inclusion in the contract between the members, as evidenced by the documents variously described as “Constitutions”, “Terms of Reference” or “Rules” requirements to act “fairly” or to do what is “fair and reasonable” between the parties to a dispute.[29] The concept of “fairness” is often elusive to lawyers but is filtered in the relevant documents for the schemes by reference to “the law” and to the relevant industry code of conduct or practice as well as, in the case of the BFSO, “good practice” for that industry, in that case, banking.[30] The TIO has stated that:

“In most cases, application of the law and industry codes will lead to a fair and reasonable outcome. In rare instances, where the law provides no clear guidance, and in the absence of a relevant industry code, the TIO will attempt to reach a fair and reasonable outcome by considering a range of factors relevant in the circumstances of the case.”[31]

This raises the question of what is “fairness” and its relationship to concepts more familiar to lawyers such as “equity” and “unconscionability.”

It is very rare for the schemes to use “face to face” mediation techniques or “round table” conferencing to achieve settlements. Almost all of them resolve complaints on the basis of written material passed between the parties on a “shuttle mediation” basis. Most determinations are done purely on the papers.[32]

Practical Consequences – rights of review

Consumers are not bound by the decisions of these schemes and, if not satisfied with the outcome, can simply take whatever action is available to them under the general law. Although this does beg the question of access to justice (one of the original advantages of the schemes) it does rather reduce the importance of rights of review for consumers.

What happens, however, if an industry member of a scheme is dissatisfied with the outcome of a dispute? At first glance, they would appear to be bound by the agreements they enter into as part of becoming members of a scheme. It is fundamentally a question of entering into an “industry agreement” and/or subscribing to the Constitution and “rules” or “terms of reference” of the body which conducts the scheme.

If the only source of the power of the scheme is contractual then the consumer, of course, not being a party to the contract is neither bound by its decision nor do they have a right to its review.[33] Rights of review to industry members dissatisfied with a decision would be confined to those rights for declarations and other relief available to the members of voluntary associations for “breach of natural justice”.

This would not be the case, of course, if the schemes were held to be exercising a public or governmental power and, therefore, subject to the closer scrutiny of the courts by way of judicial review. The concept of the “hybrid tribunal” was raised in the UK in R v Takeovers Panel Ex parte Datafin Plc [1987] 815 at 818 which found that, despite the contractual nature of the source of power of the Takeovers Panel, it was exercising a governmental prerogative and its decisions, therefore, were subject to judicial review. Forbes discusses the concept of the “hybrid tribunal”. He does not address the issues raised by Datafin.[34]

Adams considers the issue virtually resolved (at least as regards the IEC) by the decision against judicial review of the UK Insurance Ombudsman in R v Insurance Ombudsman; Ex parte Aegon Life Assurance Ltd [1995] LRLR 101. In that case, the English Insurance Ombudsman Bureau, was a completely voluntary and private industry-based consumer dispute resolution mechanism established in 1981. Under the UK Financial Services Act, in 1986, the Life Assurance and Unit Trust Regulatory Organisation (“LAUTRO”) was recognised as a self-regulating organisation for the investment industry. This body established a complaints committee to handle investor complaints and delegated the investigative and complaints functions to the Insurance Ombudsman.

Rose LJ extracted certain principles from Datafin and, as Ken Adams summarises in his article on “Judicial Review of Claims Review Panel’s Decisions”, affirmed that:

“a body whose birth and constitution owed nothing to any exercise of government power may be subject to judicial review if it is woven into the fabric of public regulation or into a system of government control or if but for its existence a governmental body would assume control.”[35]

The position in the UK has changed dramatically with the passage of the Financial Services and Markets Act 2000 (UK) which set up the Financial Services Ombudsman to takeover the work of the Insurance Ombudsman, the Banking Ombudsman and other assorted dispute resolution schemes. The new entity is undoubtedly subject to judicial review and, indeed, in 2002/2003 was resisting 12 applications for such review.[36]

Adams is writing about the IEC Claims Review Panel but his strong conclusion that judicial review is not available for panel decisions could be applied to other schemes. In subsequent Australian cases which have considered Datafin, most have not found sufficient “public interest” or “legislative intertwining” to justify judicial review and have considered the making of declarations. None have dealt with industry based consumer dispute resolution schemes.[37]

Finality and the reduction in the costs of litigation are often put as some of the reasons for the establishment of these schemes.[38] The limitation of any rights of review to the barest minimum allowed by the law may well be necessary for their success both for industry and consumers.

It is no coincidence, it will be argued, that the growth in industry dispute resolution coincides with both an increase in deregulation and privatisation and a backlash against this movement in the name of consumer protection. Indeed, some have described the establishment of such schemes as the “privatisation of justice”[39] Legal economists have debated the new role of the state in the privatised economy and some have even addressed the issue of judicial review of self-regulating associations in that light.[40] .

The BFSO (then ABIO), IEC and FICS, it could be argued from history, were formed in response to government and community pressure.[41] The TIO is clearly part of a new regulatory regime as is the requirement for all entities regulated by the FSR to join an existing scheme (like FICS) or develop a new one as is the case in the timeshare industry.

Under the Radar – What has been written?

Very little has been written in either journals or texts analysing the schemes and not much more has been written which even describes them. The Australasian Dispute Resolution Journal has published only three articles since 1990 on any or all of the schemes. Most articles are of an introductory or descriptive nature[42] and, with some few exceptions, [43] little attempt has been made to analyse the role, practice and significance of the schemes.

There is no textbook devoted to these schemes and the leading Australian text on domestic or private tribunals, Forbes Justice in Tribunals makes no mention of them.[44] Most modern business, banking and insurance law textbooks mention and, in some cases, describe relevant industry schemes but, again, they contain little analysis of their operations or status[45].

Several authors, however, have attempted to address these issues albeit by concentrating on only one scheme at a time. Anita Stuhmke in the University of New South Wales Law Journal Journal and Karen Primrose in the Competition and Consumer Law Journal take differing views on the effectiveness of the TIO.[46] Ken Adams in the Insurance Law Journal takes a critical view of the General Insurance Panel of the IEC. Michael Shames has made oblique references to the IEC scheme as he argues for a similar scheme for the electricity industry.[47] Since the publication of this book, such schemes have been established for electricity in Victoria and New South Wales.

Role and Position of the schemes in the Australian Legal System

Anita Stuhmke has discussed the role of the TIO in the context of the corporatisation and privatisation of the Australian telecommunications industry.[48] She also notes that “there has been little empirical or theoretical work examining ombudsman generally, there has been even less analysis of the effect upon industry of the new Ombudsman.”[49]

Stuhmke goes to the heart of the issues as she asks “Why was the TIO introduced?” She places the genesis of the TIO within the “process of transition from a statutory monopoly which was fully government owned and operated to a competitive industry with high private sector participation” and describes the TIO as one of the “new competitive structures” created by this process.[50] She describes the scheme in some detail, gives a potted history and identifies the TIO’s “increasing role in the new regulatory regime.”[51] Indeed, she concludes that “the TIO scheme is an essential part of the deregulation of telecommunications in Australia.”[52]

These bold statements raise more questions than they answer. Stuhmke discusses briefly the phenomenon of “ privatising state owned enterprises to improve efficiency and quality” but she does not explain why this process necessitates the development of a new institution like the TIO. Somewhat erroneously, she describes the TIO Scheme as “an office of last resort”[53] without addressing at all the possibility of consumer litigation against telecommunications suppliers. Only in her conclusion does she, without reference, assert that “The creation of the TIO Scheme is an attempt to provide consumers with an effective and speedy redress when conflict arises in their commercial dealings with the telecommunications industry.”[54]

Karen Primrose quite consciously sidesteps the question of whether the TIO is characterised as an “administrative law or ADR body” as she asserts it “invites criticism as it fails to satisfy the minium requirements of either...”[55] Interestingly, she does cite Datafin[56] but does so only in the context of “impartiality” which she distinguishes from “independence.” The former appears to be concerned with questions of perceived bias in decision-making and under the heading of the latter she discusses the structure of the scheme.[57] After a brief discussion of the ratio in Datafin, she quickly concludes that “...the TIO is a body operating in the public domain and is supported by a statutory framework...” She only uses this conclusion to argue that it should be subject to the stricter test of “perception or reasonable suspicion of bias, rather than actual bias...”, the former being applicable to public bodies subject to administrative law; and the latter for purely private or domestic bodies.[58]

Ken Adams does not deal with the role and position of the IEC scheme directly. Indeed, he ignores entirely the economic and political background of the establishment and operation of the scheme. He passes quickly over the establishment of the IEC Panel and does not link the role of the Federal Minister for Consumer Affairs in the establishment of the Scheme to the origins of its power[59] despite the significance placed by Lord Justice Rose on such matters in Aegon Life.[60]

Michael Shames argues that the deregulation of the provision of utilities, such as electricity, presents new challenges for regulators. Apart from consumer education, Shames opines that complaints resolution is an area where the “post-modern regulator” must increasingly rely on the social sector. He sees the imposition of an industry based independent complaint resolution body as a way of “reducing regulatory costs and interference.” He argues that “no-cost redress is essential if the regulator is to encourage consumers to bring examples of market failure to their attention. It is also necessary to level the playing-field advantage enjoyed by better-resourced providers.”[61] His bold conclusion, for the electricity industry, is that: “...the creation of an external, neutral and universal complaint resolution process as a means of mitigating potential quality of service deterioration is an essential step in deregulation policy.”[62]

He uses the IEC as an example of a “public-private dispute resolution mechanism” which is “self-sustainable, independent and sufficiently expert to resolve complicated disputes.”[63]

Theoretical Framework and Assessment

Taking the theory of a “factionalised society” from Peter Drucker’s Post-Capitalist Society, Shames identifies the importance of special interest groups and the “social sector” as having an “increasing impact upon business decisions” in the deregulated environment and he identifies this “social sector” as being the “third player in the institutional triumvirate.” He calls them the “superconsumers” who will “shape the opinions of other consumers” and are the “collective conscience of the community.” [64]

Shame’s analysis fails to explain the political and administrative means by which the “superconsumer” social sector gets together with industry to form an effective industry funded and industry specific dispute resolution scheme.

What Shames does well, however, is that he sets up and explains some criteria for assessing such schemes and concludes that the IEC model is “superior to the internal Ombudsperson or Informal Appeals Group model which is often sponsored by American industry.” His criteria are:

• Neutrality;
• Due process;
• Economic disincentives to litigate;
• Universality;
• Information gathering;
• Case screening. [65]

These may well be a useful set of criteria to match against those in the ASIC PS139 and the DITR Benchmarks.

Stuhmke appreciates the challenge to the public/private law distinction. She notes the “proliferation of industry based Ombudsman schemes in Australia” and says that they are being used “across a wide variety of industries – electricity, banking, insurance, credit and now, of course, telecommunications.”[66]

Whilst she notes that the term “ombudsman” may not be correctly being used in the private sector context[67], she herself has misused it by referring to insurance and credit. Firstly, the insurance industry, both general and life, does not use the ombudsman model for its schemes, the IEC and FICS. Secondly, although the BFSO, CUSCAL and FCDRS schemes must deal with credit issues because the institutions over which they have jurisdiction provide credit, there is no scheme, as such, for credit providers who are not otherwise deposit-taking institutions.[68] Thirdly, she has mixed together ADR schemes established for previously state run and now newly privatised industries with those established for industries which have always been the province of the private sector.

She discusses the traditional role of public sector ombudsmen and refers to concerns by academic and other commentators that the use of the title in the private sector may be misleading.[69] She suggests that this is “really a question as to whether industry ombudsman are genuine ombudsman.”[70] She then adopts some criteria promulgated by a former Commonwealth Ombudsman, Ms Phillipa Smith and proceeds to evaluate the TIO against these criteria.[71]

This ambitious and, indeed, interesting process whilst fruitful does, it is submitted, misstate the question. Rather than evaluate the TIO as an “ombudsman”, it should be evaluated as an effective industry based consumer dispute resolution scheme and work should be done to determine what that means.

Admittedly, to some extent, this is what she does anyway and she makes several cogent criticisms about the independence, jurisdictional limitations, powers, accountability and accessibility of the scheme. [72] She echoes of the assertion of Paul Morris that “the credibility of the TIO Scheme would be strengthened if control of the budget was passed to the Council”[73] and, although both the banking and insurance schemes have since moved to this model, there is, as yet, no change at the TIO.

Karen Primrose also has some structural criticisms of the TIO in relation to its independence. Unfortunately, her critique loses strength when it falls into inaccuracy. For instance, when describing the three entities of which the TIO “consists”, the office, the board and the council, she says that they are “overseen” by the Ombudsman. This is only true for the TIO office.

Interestingly, she does cite Datafin[74] but her concept of “impartiality” appears to be concerned with questions of perceived bias in decision-making and under the heading of “independence” she discusses the structure of the scheme.[75] She concludes that “...the TIO is a body operating in the public domain and is supported by a statutory framework...” and argues that it should be subject to the stricter test of “perception or reasonable suspicion of bias, rather than actual bias...”, the former being applicable to public bodies subject to administrative law; and the latter for purely private or domestic bodies.[76]

Later, however, juxtaposing “ADR body” with “administrative law body” she retreats from her earlier characterisation of the TIO as administrative but says this does not really matter.[77] Had she examined more authorities her work would have been more authoritative and clear on the question of whether the distinction between public and private decision making is less important now, and that as a “hybrid body” the TIO is at the crux of this distinction. .[78]

Ken Adams does not consider the role and position of the schemes in the Australian legal system, nor develops or adopts a theoretical framework for their assessment. He has adopted a legal positivist mode of analysis and this drives him to apply administrative law principals such as the requirements of natural justice.

He explicates natural justice as including the hearing rule and the rule against bias and, chooses to focus on the former. He concludes that the Terms of Reference of the IEC Panel do not expressly exclude the rules of natural justice and that, therefore, the Panel has a duty to “act fairly.”[79]

He is quite critical of certain Panel procedures in relation to prior notice, oral hearing and representation and the right to cross-examine. His general conclusion is that: “The Panel’s current system of generally conducting hearing by written submissions will not always be sufficient” to satisfy the requirements of natural justice.[80]

In an earlier work, he argued that the jurisdiction of the IEC Panel for claims under $5,000 was both “unnecessary and inequitable” in Victoria and that it enabled “insured consumers to conduct litigation in a manner which, if adopted by the courts, would constitute an abuse of process.” His alternative conclusion was that the Small Claims Tribunal was the more appropriate forum. [81].

Rights of Review

A criticism of both the Stuhmke and Primrose articles is that although they do consider the political and economic context of the TIO they spend very little time on the legal environment in which the schemes operate. Thus, they are not instructive on the question of rights of review and appeal.

On the issue of “natural justice and fairness” Stuhmke usefully notes the potential tensions between the goals of “fairness and justness” on the one hand, and “economics and expedition” on the other provided for in the TIO Constitution.[82] After referring to work done on public sector ombudsmen, she concludes that the “integrity of the Ombudsman himself or herself is crucial to the manner in which the role is performed.”[83] The importance of personnel selection is undeniable and important for the public legitimacy of the TIO and any scheme. This does not help; however, either scheme participants, personnel or anyone else seeking to understand the schemes, particularly the vexed question of what is exactly meant by “fairness”. .

She leaves the important practical question of whether administrative law principles apply to the TIO, and by analogy to other schemes, to a footnote to her conclusion. Her assertion that “once telecommunications is deregulated and shifted into the private sector, the citizen no longer has a relationship with the state and instead becomes simply a consumer of services whose relationship is a private contract with industry”[84] is supported, somewhat, by her earlier discussion.[85]

She then footnotes that there is some debate over “whether administrative law principles apply to former GBEs (government business enterprises) and the promotion of the values of openness, rationality, fairness and participation in the public sector....”[86].

Surprisingly, she does not even observe that this theoretical discussion may have a practical outcome for review of TIO decisions. If the administrative law approach is adopted, this leaves the way still open for judicial review of TIO decisions at the instigation of an aggrieved industry member. Alternatively, only the more limited avenues of appeal and review available for purely private associations and contractual relationships apply. .

The question of review is also initially dealt with in a long footnote by Karen Primrose though she does , however, later consider what standards or “rules” apply to the TIO decision-making process. In doing so, she recognises the tension between characterisation of the TIO as “an ADR or administrative body.” On this point, she sidesteps any resolution of this question as she asserts: “...regardless of whether the TIO is characterised as an administrative law or ADR body, it invites criticism as it fails to satisfy the minimum requirements of either body.”[87] As discussed above, she refers to Datafin but only does so to conclude that the TIO would be subject to a stricter test of bias.[88] Although she does make the conclusion that the “TIO is a body operating in the puclic domain and is supported by a statutory framework...” she does not expressly argue that this makes its decisions subject to judicial review.[89]

Neither Stuhmke nor Primrose considers the practical technical issue of which form of action review of decisions of the TIO, and by analogy other schemes, should take. They reach largely opposite conclusions about the effectiveness of the TIO. Stuhmke is generally quite supportive and although she says the “jury is still out” she does say that “...the ombudsman model seems ideally suited to industry.”[90] Primrose, on the other hand, is unequivocal in her conclusion that the TIO is a “scam.”[91]

Ken Adams directly addresses this issue in his article “Judicial Review of Claims Review Panel Decisions.”[92] He concedes that the Datafin case raises the possibility of judicial review of IEC Panel decisions by originating the concept of the “hybrid tribunal” but he is highly persuaded by the decision in Aegon Life which restricted rights of review for a body which, at first glance, is very similar to the IEC Panel.

Adam’s submission that “the Panel is not so interwoven with legislation such as to equate its function with the discharge of a public duty” has been overtaken by later events such as the passage of the Financial Services Reform Act 1999 and his assertion that the Panel “is even less interwoven than the English Insurance Ombudsman” is no longer true.[93] As discussed [94], the situation in the UK has dramatically changed in favour of judicial review.

What is missing from the scant Australian literature on industry based dispute resolution schemes is any attempt to fit them into the legal system in a jurisprudential sense. There has been some attempt to address the doctrinal inconsistencies of the UK courts when dealing with self-regulatory associations by adopting jurisprudential approaches which accommodate both a plurality of legal sub-systems with their own internal norms and an overall system of legal accountability. This theory was mostly developed in response to cases about the internal workings of self-regulatory associations and not entities which dealt with consumer disputes.[95]

Conclusion

These schemes are something new. They are a phenomenon that may be a necessary correlation of the new forms of industry self-regulation which are developed in response to privatisation and legislative deregulation. They challenge previous notions of the role of the state in the resolution of individual disputes and they may stand outside the existing dichotomy between public and private law.

Much research and analysis can be done in developing a better understanding of where they fit in the Australian legal system and how they may best fulfil the roles for which they were established. Informing decision-makers about their role and scheme members about their rights of review will not only be interesting, it will be useful.

[1] BFSO Annual Report 2002/2003

[2] which operates the General Insurance Claims Review Scheme.

[3] www.iecltd.com.au as at 15 January 2003.

[4] TIO Annual Report 2002 p 16.

[5] Community Solutions, Review of the Financial Industry Complaints Service 2002 – What are the Issues? (La Trobe University, University of Western Sydney) p17.

[6] FCDRS Council Meeting Minutes 18 February (2003).

[7] IBD Annual Report 2001 Executive Summary.

[8] IBD, n 7, p 2.

[9] BFSO, n 1, Press Release at www.BFSO.org.au .

[10] IEC Annual Review 2002 at www.iecltd.com.au .

[11] Community Solutions etc, p 20.

[12] FCDRS, n 6.

[13] BFSO Terms of Reference 5.1(e).

[14] FICS Rules – Rule 12.

[15] TIO Constitution Clause 6.1.

[16] IBD Terms of Reference p 3.

[17] FCDRS Terms of Reference, p 4..

[18] BFSO, n 15 at Definitions.

[19] IBD, n 18, p 2.

[20] IEC Terms of Reference 1.2 Definitions.

[21] TIO Policies and Procedures Manual 5.3.

[22] FICS Rule 3 Definitions and Corporations Act 2001 (Cth) s761G(7) and Reg 7.1.11 though the methods of calculation of the value of such products are quite complicated.

[23] ASIC PS139.

[24] BFSO, n 15; IEC, n 22.

[25] See in relation to domestic tribunals generally Forbes JRS, Justice in Tribunals ( Federation Press, 2002)

[26] Associations Incorporation Acts of Queensland 1981; Tasmania 1964; Victoria 1981; New South Wales 1984; South Australia 1985; Western Australia 1987; Northern Territory 1963; and Australian Capital Territory 1991.

[27] See also Forbes, n 28, ch 3 and 4;

[28] ASIC PS139.24.

[29]BFSO Terms of Reference 1.3; IEC Terms of Reference 11.14; TIO Constitution 2A.2

[30] BFSO, n 15.

[31] TIO Annual Report 2003, p 27.

[32] An exception to this is the work of the Fraud Adjudicator in the IEC scheme..

[33] Adams, K, “Judicial Review of Claims Review Panel Decisions” (1997) 8 ILJ 105 at p 114.

[34] Forbes, n 28, pp 13-14.

[35] Adams, K “Judicial Review of Claims Review Panel’s Decisions” (1997) 8 ILJ No 2 at 16.

[36] Financial Services Ombudsman Service Annual Review 2003, Chief Ombudsman’s Report. , http://www.financial-ombudsman.org.uk/publications/ar03/ar03-chief.htm as at 23 April 2004.

[37] See Norths Ltd v McCaughan Dyson Capel Cure Ltd & Ors (1988) 12 ACLR 739 per Young J. at 745; and Adamson and Others v New South Wales Rugby League Ltd and Others [1991] FCA 425; (1991) 103 ALR 319 per Gummow J at 347.

.

.

[38] Fahey J, Second Reading Speech Telecommunications Act.

[39] Stuhmke, A “The Corporatisation and Privatisation of the Australian Telecommunications Industry: The Role of the Telecommunications Industry Ombudsman” (1998) 21(3) UNSW LJ.

[40] Black J, “Constitutionalising Self-Regulation” (1996) 59 MLR p 24 –55.

[41] Pentony B, Graw S, Lennard J, and Parker D, Understanding Business Law (3rd ed, Butterworths, 2003) p 33 and Isaacs, J Insurance Enquiries and Complaints – The First ten Years, (2001) Insurance Enquires and Complaints Ltd, pp 6 – 8.

[42] e.g. Bean P, “A Guide to the Private Alternative Dispute Resolution Schemes” (1994) 5 ADJR 203.

[43] Adams, n 37, and “The Claims Review Panel: the Fifth Wheel?” (1996) 7 ILJ 109; and Primrose K, “The Telecommunications Industry Ombudsman Scheme: Consumer Safeguard or clever scam?” (2001) 8 Competition & Consumer Law Journal 311; and Stuhmke, n 40, p 807 – 833.

[44] Forbes, n 28. This does not mean that this text does not contain valuable references for the thesis in general. It will be referred to later.

[45] Latimer P, Australian Business Law 2002 (21st ed, CCH, 2002) paras 16-045, 16-050 and 17-810; Pentony et al, n 42, paras 1.89-1.96 and paras 11.33-11.35; Turner C, Australian Commercial Law (23rd ed, LBC, 2001) p 618 and 675-6; Tyree A, Banking Law in Australia (4th ed, Butterworths, 2002) ch 40.

[46] Stumke n 45 and Primrose n 45

[47] Shames, M “Preserving Consumer Protection and Education in a Deregulated Electric Services World” in Hossain M and Malbon J (eds), Who Benefits from Privatisation? (1998) p 119

[48] Stuhmke, n 45.

[49] Stuhmke, n 45, p 820.

[50] Stuhmke, n 45, p 810.

[51] Stuhmke, n 45, p 814.

[52] Stuhmke, n 45, p 816.

[53] Stuhmke, n 45, p 812.

[54] Stuhmke, n 45, p 832.

[55] Primrose, n 45 p 320

[56] Primrose, n 45, p 317.

[57] Primrose, n 45, p 316-317.

[58] Primrose, n 45, p 316-317.

[59] Adams n 37 p 105

[60] Adams n 37 p 111

[61] Shames, n 49, p 144.

[62] Shames, n 49 p 146

[63] Shames, n 49 p 145

[64] Shames, n 49 p 141

[65] Shames, n 49 p 145

[66] Stuhmke, n 45, p 817.

[67] Stuhmke, n 45, p 818.

[68] This is despite frequent calls by the organised consumer movement for the establishment of such a scheme and the institution of “in-house” schemes by some large finance companies e.g. AVCO now GE Capital and Finance Pty Ltd.

[69] Stuhmke, n 45, p 821.

[70] Stuhmke, n 45, p 821.

[71] Stuhmke, n 45, p 822 – 832.

[72] Stuhmke, n 45, p 822.

[73] Stuhmke, n 45, p 825.

[74] Primrose, n 45, p 317.

[75] Primrose, n 45, p 316-317.

[76] Primrose, n 45, p 316-317.

[77] Primrose, n 45, p 321.

[78] Primrose, n 45, p 320 - 328.

[79] Adams, n 37, p 116.

[80] Adams, n 37, p 119.

[81] Adams, n 37, p 128.

[82] Stuhmke, n 45, p 827 referring to para 5.1 TIO Consitution

[83] Stuhmke, n 45.p 827

[84] Stuhmke, n 45, p 832.

[85] Stuhmke, n 45, p 817.

[86] Stuhmke, n 45, p 832.

[87] Primrose, n 45, p 320.

[88] See n 78

[89] See n 77

[90] Stuhmke, n 40, p 832.

[91] Primrose, n 45, p 329.

[92] Adams, n 28, p 105.

[93] Adams, n 37 p 114.

[94] See n 38

[95] Black, n 42.