Constitution and Terms of Reference FAQs

The new TOR and Constitution come into effect on 1 September 2023.

The 2015 TOR apply to any complaint you “deadlock” before 1 September 2023; the 2023 TOR apply to any complaint you “deadlock” on or after 1 September 2023.

The IFSO Scheme will apply the 2015 TOR to any complaint we consider that reached “deadlock” before 1 September 2023, regardless of the date the Complainant refers the complaint to the IFSO Scheme. For example, if you issued a notice of “deadlock” on 21 June 2023 and the Complainant refers it to the IFSO Scheme on 2 September 2023, the 2015 TOR would apply because the date of “deadlock” is prior to 1 September 2023.

It does not matter what date you receive or consider a complaint; the key date is the date of “deadlock”. If a complaint is in your internal complaints process now and you reach “deadlock” on or after 1 September 2023, the 2023 TOR will apply.

If a complaint is “deadlocked” prior to 1 September 2023, the 2015 TOR monetary limits apply. If not, the 2023 TOR monetary limits will apply - see key changes below for the new monetary limits.

The key changes Participants need to be aware of are:

  • The Applicable Monetary Amount has changed and the IFSO Scheme can now consider complaints where:
    • the claim against a Participant (or the part of a claim that is in dispute) represents a monetary amount up to $350,000 + GST or
    • the claim relates to a product that provides regular payments up to $2,625 + GST per week.
  • Some of the grounds on which the IFSO Scheme has jurisdiction to consider a complaint have been amended, in particular, the IFSO Scheme can:
    • consider a complaint where court or Dispute Tribunal proceedings have been started, but no decision has been made; and
    • decline jurisdiction if there is no reasonable prospect it can award a remedy available under the TOR.
  • The timeframe for making a complaint has changed and the IFSO Scheme will not consider a complaint where it is 6 years after a Complainant became aware, or should have been aware, of the action the complaint is based on.
  • Some of the remedies available have been amended. In particular:
    • additional interest awarded is now computed using the rate set out in the Interest on Money Claims Act 2016.
    • The amount that can be awarded for special inconvenience has increased from $3,000 to $5,000.
  • Participants must notify the IFSO Scheme they are taking a test case to the High Court before a Recommendation is made.
  • Participants’ obligations to publicise the IFSO Scheme have been clarified by requiring them to publicise them on their website, if they have one, and/or in any contractual documents they have with their customer.

This is not a new requirement; it is a clarification of the existing obligation to publicise your internal complaints process and the IFSO Scheme, so many Participants are already complying with it.

If you are not, we expect you to use your best endeavours to comply with the revised obligation, within a reasonable timeframe.

Contractual documents are those documents that set out the rights and obligations between you and your customers in respect of the financial service you provide to your customers. They will include policy documents, credit contract agreements, and statements of service. They do not include internal documents you do not provide to your customers, or contractual documents between you and third parties who are not your customers.

The obligation is to publicise the IFSO Scheme on your website and/or in your contractual documents, so that you can take a common-sense approach that works for your business and the particular financial service(s) you provide.

If a Complainant refers a complaint to the IFSO Scheme after proceedings have been commenced before a court, tribunal, arbitrator or other dispute resolution body, let the IFSO Scheme know. If no decision has been made in the other forum, the IFSO Scheme may consider the complaint. The IFSO Scheme will find out what stage the other action is at and decide whether to accept the complaint for consideration. Generally, we will not investigate a complaint where other action is actively being pursued.

Paragraph 9.1 of the TOR has been amended to clarify that parties can provide a copy of an IFSO Scheme Decision to a court, Disputes Tribunal, arbitrator, ombudsman or other dispute resolution body, where that body requires it to do so. That means, you still cannot submit an IFSO Scheme decision in your evidence. However, if a party refers to the fact that the IFSO Scheme has considered a complaint and/or made a Decision in their submission or evidence and the court or other body then requires the Decision to be provided, you will not breach the confidentiality obligations if you comply.

Interest is not routinely awarded. It has usually been applied when there has been a long delay in the Complainant receiving a payment to which they were entitled, resulting from the claim and/or internal complaint process. To see some examples, use the case study search function on the website to look up the case notes for cases 00214997 and 00208651.

Special inconvenience commonly includes the additional out-of-pocket expenses of a Complainant resulting from the complaint. For example, legal fees on occasion, incurred to respond to the complaint where the Complainant has not been taken seriously by the Participant until a lawyer is involved; fees for expert opinions like an engineer’s report to support a valid claim; or the cost of a loan taken out to cover costs caused by a delay on the part of the Participant in dealing with the claim/complaint.