CHAPTER 3
Forum Process
Framework of forum
3.1 The background paper commissioned by the Committee to provide a framework
for the forum's deliberations identified three main topics for discussion:
- essential elements of a superannuation disputes resolution scheme;
- options for a disputes resolution mechanism; and
- evaluating suggested options against the criteria.
3.2 Following the briefings from government and industry representatives,
the Committee Chairman, Senator John Watson, opened the forum to group
discussion of the essential elements of a superannuation disputes resolution
scheme.
Essential elements
3.3 The background paper prepared for the Committee as a framework for
the forum discussions by IFS Fairley Superannuation Lawyers, proposed
a number of essential criteria which must be met in a successful superannuation
disputes resolution mechanism. These are:
- Accessibility - the scheme should be easily accessible
by complainants, with minimal bureaucratic or legal requirements;
- Independence - the scheme must be seen to be independent
of the industry and of employers, insurers, consumer or other interest
groups;
- Procedural fairness - the scheme must accord procedural
fairness to all parties;
- Economy - the scheme should provide informal and cost
effective procedures for complainants nationwide;
- Speedy decision making - the scheme should aim for a
simple, transparent, consistent and flexible decision making process,
consistent with the principles of procedural fairness;
- Constitutional validity - the scheme should be able
to withstand legal challenge, whether to the exercise of its review
function or the scope of its decision making;
- Complaint criteria - the scheme should reflect the present
limits on jurisdiction - to review trustee decisions as they relate
to a particular fund member, and not those that relate to the management
of a fund as a whole;
- Binding decisions - the scheme should have the necessary
legislative backing to ensure that its determinations are binding on
fund trustees;
- Expertise - the scheme should have specialist and technical
expertise in the area of superannuation; and
- Costs - the scheme should be funded either directly
or indirectly from the superannuation levy currently paid by fund trustees.
[1]
3.4 Forum participants, in separate correspondence to the Committee,
and in the course of the morning's discussion, generally agreed that the
above criteria formed a good basis on which to evaluate any proposed resolution
mechanism. Ms Janet Murphy, of the Consumer Affairs Division, Department
of Industry, Science and Tourism, drew the forum's attention to a set
of benchmarks for industry-based customer dispute resolution schemes,
drafted by a Working Group including representatives of the current major
industry schemes, and issued by the former Minister for Customs and Consumer
Affairs in August 1997.
3.5 The benchmarks included three additional criteria:
- accountability;
- efficiency; and
- effectiveness.
3.6 Ms Murphy suggested these additional elements should also apply to
any superannuation complaints body, a view supported by Mr Michael Lillicrap,
representing the Industry Funds Forum. [2] Ms
Murphy noted that public accountability was essential to engender confidence
in such a body:
Part of accountability is highlighting any systemic industry problems
for the relevant body or bodies. This is not just dealing with complaints
as individual complaints. Where there is a systemic issue with a particular
company, a particular trustee or across the industry, complaints should
be brought to the attention of the appropriate bodies. [3]
3.7 She noted the need for ensuring efficient operations in dealing with
disputes – by keeping track of complaints, ensuring the process deals
with consumers expeditiously, and regularly reviewing the scheme's performance.
The third element she proposed, effectiveness:
…would entail the scheme's having terms of reference that are
clearly understood by all parties, so its jurisdiction and what it can
and cannot deal with must be clearly spelt out and clearly understood
and there should be periodic review not only of its terms of reference
but of the way it is operating. [4]
3.8 Several participants nominated effective enforcement of decisions,
particularly against a recalcitrant party, as a necessary component of
any complaints handling mechanism. It was also suggested by Mr George
Raitt, of Blake Dawson Waldron, that the scheme should provide `limited
avenues for appeal consistent with competing objectives of ensuring that
justice is done while reducing costs and delay in achieving a binding
outcome.' [5] Both Mr Raitt and Ms Philippa
Smith of ASFA put forward national coverage of all service providers and
persons affected by their decisions as desirable features for inclusion.
3.9 Mr George Williams, Senior Lecturer in Law, Australian National University,
broached the topic of the relative weighting of the essential elements.
He noted that the element of constitutional validity or certainty is crucial
to whatever form of scheme might be established. However, he cautioned
against interpreting this as meaning that any replacement scheme should
be immune from constitutional challenge:
…to my mind that is set far too high as a criterion. I think it
is almost impossible to ever establish a body like this, given recent
High Court decisions, that could be described as unassailable. [6]
3.10 Mr Williams noted that attempts to maximise certainty, for example
by establishing a court based scheme, or a national body established under
territory law to be taken up by complementary state legislation, could
significantly impact on other desirable criteria such as fairness, economy,
informality and speed.
Options
3.11 In the background paper distributed prior to the forum, participants
were asked to consider the merits of three alternatives for consideration
by the Government:
- to establish an industry complaints body (examined in Chapter 5 of
this report);
- to reconstitute the SCT as part of the Federal Court (examined in
Chapter 6); and
- to amend the Complaints Act to ensure constitutional validity (examined
in Chapter 7).
3.12 During discussions, forum participants identified a number of other
options for consideration. These were:
- establish an industry code of practice under the Trade Practices Act
(examined within Chapter 5);
- establish a state based body (examined in Chapter 8); and
- allow the SCT to arbitrate complaints by consent (Chapter 4).
-
Industry code of practice
3.13 Mr Andrew Rogers, QC, of Clayton Utz, suggested setting up an industry
code of practice under amendments to the Trade Practices Act that could
prescribe all the desirable elements canvassed by the forum. He envisaged
a situation in which it would be compulsory for every participant in the
superannuation industry to subscribe to a scheme of dispute resolution
encompassing all those elements. [7]
State based body
3.14 A fifth option, put forward by Mr George Williams, was the establishment
of a state-based body. He indicated this could best be achieved by having
the Commonwealth legislate for say, the Australian Capital Territory,
to establish a complaints body and for that legislation to be extended
across the country via complementary state legislation. He cited the Corporations
and Securities Panel as an example of a national body successfully established
using this technique. [8]
SCT to arbitrate by consent
3.15 A further option, nominated by Mr John Larkin, of the Insurance
and Superannuation Commission, would involve amending the Superannuation
(Resolution of Complaints) Act 1993 to enable the SCT to arbitrate
disputes with the consent of the parties:
The parties in dispute would enter into agreements to be bound by a
tribunal award on a case-by-case basis. The arbitration award would
be enforceable under contract law and state arbitration laws. [9]
3.16 This option is considered to be an interim solution only and the
Committee discusses it in the following chapter.
Footnotes
[1] Background Briefing Paper, p. 4-6.
[2] Evidence, p. 21.
[3] Evidence, p. 11.
[4] Evidence, p. 11.
[5] George Raitt, Complaints resolution mechanisms
in the superannuation industry and the issue of judicial power, a
paper prepared for the Law Institute of Victoria Journal, p. 1.
[6] Evidence, p. 15.
[7] Evidence, p. 17.
[8] Evidence, p. 15.
[9] Evidence, p. 5.
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