effective management of pi disputes at fos sydney 8 november 2011 melbourne 9 november 2011

Effective Management of PI Disputes at FOS Sydney 8 November 2011 Melbourne 9 November 2011

Alison Maynard - Ombudsman, Investments, Life Insurance & Superannuation Amie Cousins, Manager Conciliation Team Maxine Tills, Sparke Helmore Ewen McKay, Assetinsure (Melbourne) Melinda Cavalieri, Conciliator (Melbourne) Cathie Thompson, Vero (Sydney) Alexandra Sidoti, Conciliator (Sydney) Presented by

Alison Maynard - Ombudsman, Investments, Life Insurance & Superannuation Introduction and Welcome

The role of FOS Whats new at FOS? The FOS Process What FOS needs from PI Insurers PI Insurer Perspective Representing PI Insurers at FOS Outcomes of FOS Disputes Myth-busting statistics Questions Introduction and Welcome

Alison Maynard - Ombudsman, Investments, Life Insurance & Superannuation The role of FOS

External Dispute Resolution Scheme Approved by ASIC (RG139) Condition of AFSL if dealing with retail client Independent/accessible/fair/accountable/efficient and effective Free to consumers Paid for by industry via fees and levies Resolves disputes by negotiation, advice and conciliation Makes decisions binding on Members. The role of FOS

Member Obligations Constitution /Terms of Reference/ Membership Agreement Must have compliant IDR process (RG165) Must advise complainants that they may complain to FOS Must cooperate with process Must observe timeframes Must comply with Determination if accepted by consumer Must pay fees/levies. The role of FOS

Decision making criteria (RG139.183) In determining the extent of loss or damage suffered by a complainant, the scheme should have regard, not only to relevant legal principles, but also to the concept of fairness and to the relevant industry best practice. The role of FOS

Decision making criteria - FOS .. FOS will do what in its opinion is fair in all the circumstances, having regard to each of the following: a) Legal principles b) applicable industry codes or guidance as to practice c) good industry practice; and d) previous relevant decisions of FOS or a Predecessor Scheme (although FOS will not be bound by those) The role of FOS TOR 8.2

What's new at FOS ? Alison Maynard - Ombudsman, Investments, Life Insurance & Superannuation

Some significant changes Monetary limits and caps Consequential and non-financial loss Time limits Recommendations and determinations New Terms of Reference

A cap is the maximum value of the remedy FOS may award for a claim (excluding costs and interest) Monetary limit for a claim is now $500,000 Different caps apply for different types of claims Some caps will increase on 1 January 2012 Caps will be indexed Compensation Caps

Amount of caps

Direct financial loss Consequential (indirect) financial loss capped at $3,000 per claim Non-financial loss capped at $3,000 per claim Legal or other professional costs or travel costs incurred by Applicant capped at $3,000 (unless exceptional circumstances apply) Compensation

Dispute must be lodged with FOS: within 6 years of date when Applicant first became aware (or should reasonably have become aware) they suffered the loss; and where Applicant received IDR response within 2 years of the date of that IDR response In exceptional circumstances, FOS may consider dispute lodged outside these time limits Time limits

Recommendations have been introduced as the first stage of the decision-making process. A case will proceed to determination by an Ombudsman or Panel if either party rejects the recommendation. Recommendation

For the purposes of applying monetary limit/cap. A set of facts when put together give the Applicant a right to ask for a remedy (cause of action) FOS cannot aggregate claims just because they arise out of an ongoing relationship between the Applicant and the Financial Services Provider FOS interpretation based on Finkelstein J. in Financial Industry Complaints Service v Deakin Financial Services [2006] FCA 1805. What is a claim at FOS?

Multiple parties e.g. husband, wife, husband and wife jointly, SMSF will all be entitled to make a separate claim Multiple separate instances of advice (usually evidenced by separate Statements of Advice) may also give rise to separate claims. NB: FOS looks at the amount of the loss, not the total amount invested. What is the practical effect?

LOSS Direct Consequential (limit $3,000) Too remote OBJECT To put the Applicant in the position they would have been in, but for the breach of duty. How does FOS calculate loss in financial advice disputes?

Direct loss usually calculated by reference to the performance of suitable investments in comparison with the performance of the unsuitable (disputed) investments. FOS may look at: Suitable investments the Applicant has switched to (where the Applicant has switched from the unsuitable investment); The suitable benchmark asset allocation used by the FSP; The suitable industry benchmark allocation; Suitable investments that were actually recommended by the FSP to the Applicant; or Other investments or indices that represent suitable investments. How does FOS calculate loss in financial advice disputes?

Compensation awarded may be reduced where Applicants fail to take reasonable care of their own interests and are regarded as contributing to their own loss. The compensation awarded will be reduced to the extent that the Applicant has deviated from the standard of care a reasonable person in the Applicants position would have taken. Contributory Negligence and Mitigation of Loss

When did the FSPs breach of duty or contract occur? When did the Applicant become aware of the FSPs breach or should have become aware? Were there any actions the Applicant could have taken to avoid or minimise the consequences of the FSPs breach? Were the actions what a reasonable person in the Applicants position would have done? FOS will look at

Amie Cousins, Manager Conciliation Team The FOS Process

Process

Disputes lodged by several means including online dispute form, email, letter Registration occurs where an Applicant lodges a dispute before first complaining to the FSP or within 45 days of first requesting the FSP to remedy the matter FOS registers a dispute by notifying the FSP that dispute has been lodged and it has up to 45 days (or balance) to resolve the dispute directly with the Applicant FOS may extend or reduce the 45 day period in special circumstances FOS may deal with an urgent dispute immediately Lodging a dispute

A dispute will proceed and jurisdiction will be assessed where: An Applicant has previously complained to the FSP and has received a response which does not resolve the dispute; or More than 45 days has passed since the Applicant contacted the FSP and the dispute remains unresolved. at the time the dispute is lodged with FOS Where FSP has not resolved dispute

If a dispute is within jurisdiction FOS notifies the FSPs of the dispute and provides copy of the dispute material FSPs are provided with 28 days to provide initial dispute response and all relevant information to FOS After receiving initial FSP response to a dispute FOS considers most appropriate means of progressing and resolving a dispute Dispute handling

FOS is focused on assisting FSPs and Applicants resolve disputes by agreement New TOR and dispute process provide for variety of dispute resolution methods including: negotiation conciliation initial assessment of merits FOS has been increasing its use of conciliation and negotiation to resolve disputes and this will continue to expand in next 12 months Dispute handling (2)

Voluntary Confidential Quick and efficient Offers creative and commercial outcomes High satisfaction rate Control with the parties (outcomes/authority) Conciliator can provide information and reality test. Dispute handling (3)

To assist in consideration of dispute, FOS can require a party to: - take action - provide necessary information - attend interview FOS can appoint independent expert to report to FOS If FOS obtains expert advice, it can require FSP to pay or contribute to experts reasonable fees limited to $3,000 per dispute unless circumstances are exceptional Dispute handling (4)

FOS has a new two step decision making process: Recommendation Determination Decision making process

A Recommendation is a comprehensive assessment that sets out: all the relevant facts of the dispute the information relied on the view reached by FOS about how the dispute should be resolved, and the reasons for that view A Recommendation is made by a FOS caseworker who is authorised by the Chief Ombudsman to make Recommendations Recommendation

A Recommendation can be accepted or rejected within 30 days If both parties accept Recommendation, it is binding and dispute is resolved If either party rejects the Recommendation, a Determination will be made Determination is final decision and if accepted by Applicant within 30 days is binding on FSP In certain circumstances a Determination may be expedited without Recommendation being made Decision making process

When considering whether to expedite a dispute to Determination, FOS takes into account the circumstances of the dispute, including: Any urgency (for example, if an Applicant is experiencing ill health) The size of the loss involved The age of the matter Whether an FSP has gone into external Administration Decision making process

Chief Ombudsman (or delegate) decides whether to allocate a Determination to Ombudsman or Panel Factors which are taken into account include: type of dispute expertise required significance of dispute submissions by parties Ombudsman or Panel?

Investments & Life Insurance disputes that will normally be determined by a Panel include: claims for >$50,000 fraud claims income protection claims complex or new financial products complex factual questions Further Guidelines on allocation to be developed over time Ombudsman or Panel in ILIS?

Timeliness, timeliness, timeliness! First response due in 28 days. Usually correspondence from FOS will give you good information on what is required Raise any jurisdictional arguments as early as possible Let us know early if you need more time to provide a response (its a lot easier for us to explain it to the applicant then) Full and complete response with all evidence relied upon supplied. Our staff are there to assist both parties to resolve the dispute Consider whether a conciliation conference may assist in resolution and ask for one to be conducted if you think it can Make use of the FOS staff member who is handling the dispute ring and ask questions. Refer to the FOS website: www.fos.org.auwww.fos.org.au Dealing with the FOS process

Morning Tea

Ewen McKay, Assetinsure The PI Insurer Perspective

FOS Seminar for PI Insurers THE PI INSURER PERSPECTIVE Ewen McKay - Assetinsure Pty Ltd

Agenda The good. The not so good. The not so good at all. The future? Page 41

The good. In reality, the majority of PI claims are not litigated FOS is an expert forum for conciliation of disputes/ claims. New FOS Terms of Reference (TOR) 2010 include some improvements, most notably: 2 stage determination process (in built quasi review mechanism); dispute resolution criteria now include regard for previous relevant decisions of FOS and predecessors (although not bound by same). FOS is much more transparent than in the past. Regular & ongoing dialogue with PI insurers/ brokers. Page 42

The not so good. Historically, the relationship between PI insurers and FOS (FICS) could be characterised as fraught. FOS generally perceived by PI insurers as applicant (claimant) friendly. Nature of FOS in conflict with fundamental assumptions of the insurance model: no rules of evidence; not strictly bound by current law (other criteria apply); limited right to appeal/ review determinations (improved); not bound by precedent (improved). Different approaches to aggregation/ disaggregation of disputes/ claims. Page 43

The not very good at all. Concern about apparent narrow focus of FOS product/ transaction oriented rather than portfolio oriented. Concern about the ability of FOS to adequately deal with multi-party or complex matters esp. where there are extra-jurisdictional issues: consideration of parties who are not members of FOS; proportionate liability. Concern about proposed new limit in 2012 for investment matters ($280,000 monetary value of remedies). Page 44

The future? Increase in limits makes FOS disputes more material to PI insurers greater sensitivity to contentious determinations and procedural issues. Scope for PI insurer/ FOS disputes to increase? Test case provision (Clause 10 of TOR) scope to remove dispute from FOS to court system where: important consequences for FS provider or industry; or important point of law. Any deterioration in claims outcomes will lead to increased PI insurance premiums/ excesses and/ or PI insurers exiting market. Dialogue will be increasingly important. Page 45

Maxine Tills, Special Counsel, Sparke Helmore Representing PI Insurers at FOS

48 FOS From the perspective of ASFLs Solicitor The Terms of Reference (TOR) of FOS operate as a contract between FOS and its members. The types of disputes FOS can consider are extremely broad. FOSs discretion to exclude or continue to determine a dispute is also extremely broad under clause 5.2 of TOR. One reason for FOS to exercise its discretion to exclude a claim is there is a more appropriate place to deal with the dispute such as a Court, Tribunal or other dispute resolution scheme. Another is that the Dispute is frivolous or vexatious or lacking in substance. If FOS exercises its discretion to exclude a Dispute, the Applicant has a right of review under clause 5.3(b) if FOS is satisfied that the Applicants objection may have substance. There is no review or appeal provisions in the TOR for members. 48

Increase in Disputes in FOS The GFC caused a spike in related claims for at least 2 years following it. Currently unclear if there is a substantial number of GFC related claims yet to be made. Increase in FOS monetary jurisdiction from $150,000 to $280,000 for Disputes lodged after 1 January 2012 may lead to an increase in Disputes. 49

50 When the claim is made against an AR/AFSL Importance of notifying PI insurer early. 28 day response period from initial FOS letter has usually expired before instructions from the PI insurer to act in defence are obtained. Need to obtain the client file and a statement from the AR quickly. Often difficult if AR has left the AFSL to obtain either documents or a statement.

51 When the claim is made against an AR/AFSL (cont.) Difficult defending claims when only evidence is documentary evidence which is incomplete. Importance of file notes of client meetings needs to be stressed. TOR in clause 7.4 allows FOS to extend timeframes if FOS considers this appropriate.

52 FOS Process Not litigation. No litigation risk to claimant. No costs consequences to claimant. FOS not bound by legal rules of evidence (clause 8.1 TOR). Not a commercial process designed to achieve a commercial outcome. No ability to test the claimant by cross examination. FOS in making a determination may have to make findings of credit.

53 FOS Process (cont). The claimants letter outlining the basis for the claim against the AFSL usually sets out some relevant facts and the loss. In simple cases this is sufficient to enable the solicitor for the AFSL to assess liability. In more complex cases, particularly where there are what amount to allegations of misleading and deceptive conduct, claimants do not address causation issues.

54 FOS Process (cont). There is often insufficient information provided by the claimant to assess liability. Claimants provide a plethora of submissions most of which are irrelevant. Increase costs for AFSL in reviewing and trying to respond to submissions. Role of case officers in refining claims.

55 FOS Process (cont). FOS may require a party to a Dispute to provide or produce for FOS any information FOS considers necessary. FOS may obtain expert evidence from a legal expert or industry expert appointed by FOS. FOS may require the AFSL to contribute to the cost (not more than $3,000 unless exceptional circumstances apply). Does AFSL need to submit signed witness statements of AR or expert reports on issues such as whether a particular portfolio was appropriate for the particular risk profile. Increase in costs to ASFL as a result.

56 FOS Process (cont.) - Conciliation Conciliation is not a commercial process. Often only incentive for claimant to settle is time. Claimants sometimes do not understand the legal issues or level of offers. Conciliators are not in a position to address legal issues and reality check claimants.

57 FOS Process - Conciliation (cont.) Good commercial settlements achieved through conciliation where: Claimant had legal representation; AFSL had liability on my assessment; Claimant was commercial and was prepared to accept a discount for the certainty of a settlement; Legal costs reduced as a result.

58 FOS Process - Conciliation (cont.) Conciliation not successful where: Claimant did not understand legal issues; Claimant not prepared to settle for less than the whole claim; Liability was not clear on my assessment negligence verses market forces. In those cases, should AFSL proceed to a Recommendation without a conciliation conference?

59 FOS Process (cont.) Calculation of quantum is often difficult. FOS article on the website provides guidance. Claimants inability to assess quantum or understand why the quantum is not what they think it is, is often a major impediment to settlement. Loss in inappropriate advice claim calculated by comparing the performance of unsuitable investments with the performance of suitable investments.

FOS Process (cont.) Loss calculation in misleading or deceptive conduct claims depends on whether the claim is a no transaction or different transaction claim. In every Dispute, the party submitting that FOS should take into account suitable investments must provide evidence in support of the submission. Does this put the onus on the ASFL to provide expert evidence to prove the loss? 60

61 FOS Process (cont). Quantum Issues Assessing quantum where loss has not crystallised is a problem (i.e. shares/funds not sold). Assignment of investments to AFSL. Splitting Disputes into claims.

Concerns With the increased monetary jurisdiction and splitting of claims, query whether FOS is the appropriate venue for complex and high value claims from the AFSLs perspective. AFSL may request FOS exercise its discretion to exclude the dispute under Clause 5.2(a) TOR. 62

Amie Cousins, Manager Conciliation Team Outcomes of FOS Disputes

Applicant had a SMSF Advisor recommended three separate investments into Basis Yield Fund totalling $130,000 Applicant claimed That the advice received was inappropriate for needs; Nature of the investment was misrepresented; and That the advisor breached the service agreement in place and that the standard of service was poor Applicant sought $103,382.21 ($130,000 invested, less earnings) Case Study#1: 18959 - Facts

Panels Decision The advisor had failed in Preparing; Implementing; and Reviewing the applicants strategy Investment not suitable to the client Compensation awarded. Case Study#1: 18959 - Decision

The asset allocation was made on generic basis Not tied to the risk profiling outcomes No real understanding of the product In particular, the effect of the product managers discretion; and The advisor did not understand impacts of integral gearing in the product and how this affected risk and performance The product was therefore treated as a defensive asset when it was not Further the advisors efforts to monitor and review the investment were in breach of the service agreement. Case Study#1: 18959 Reasons for Decision

1. Know your client Risk profiling tools are useful Must justify with reasons if deviating from the risk profile Must not use tools that are weighted towards pre-judged outcomes Must do more than just use a risk profiling tool. Case Study#1: 18959 Lessons Learned

2.Know your product The advisor must understand the product him/herself Research is a vital part of the picture But out of date research is not useful Must be able to explain the product and its risks, in terms the client can understand. Case Study#1: 18959 Lessons Learned

3. Fixed Interest All fixed interest investments cannot automatically be put into the safe part of the portfolio Not all fixed interest products carry the same level of risk Some fixed interest products carry a risk of total loss. Case Study#1: 18959 Lessons Learned

Ms M sought advice regarding her retirement planning Ms M was subsequently classified as a Balanced investor The advisors recommendations included an investment into the Basis Yield Fund Case Study#2:19060 - Facts

Ms M claimed that her adviser: Failed to complete a needs analysis Inappropriately classified her as a balanced investor Provided inappropriate advice Failed to adequately disclose fees, costs, charges Acted without authority. As a result Ms M is claiming a loss of $62,131.77 on her portfolio accountable to the Basis Yield Fund. Case Study#2:19060 - Claim

Advisor held four separate meetings with Ms M Ms M was correctly classified as a balanced investor The fees were clearly explained Despite no signed authority it is clear Ms M authorised the advisor to proceed The advisor recommended a well diversified portfolio of 11 managed funds Basic Yield Fund was 10% of portfolio Basic Yield Fund had highest research rating Advice was appropriate Know your client rule was satisfied Loss was caused by market conditions and specific product failure Case Study#2:19060 FSPs Position

Advisor provided a good level of service, but failed in relation to the provision of some documentation However, these failures do not mean FSP is automatically liable to compensate Ms M for her loss Complaint really about Investment performance Complaint was not upheld. Case Study#2:19060 Decision

The SOA provided good disclosure and a good discussion/explanation of risk Did not downplay the risks The SOA said If you are not comfortable with this allocation or do not understand what it means do not proceed There was proper disclosure of fees and charges. Case Study#2:19060 Reasons for Decision (1)

The advisor knew his product and matched it to his client He understood the product He had read the PDS He had read research reports He had twice met with the Business Development Manager of the Fund The fund was recommended as a medium term investment research reports support this recommendation Case Study#2:19060 Reasons for Decision (2)

Failure to fulfil certain obligations does not necessarily mean a claim is upheld Know your product and your client. Advisors must make efforts to really understand the product and then recommend it appropriately. Documentation must be clear and disclose key information Specific risks (dont down play them) Fees Case Study#2:19060 Lessons Learned

Facts Mr P sought financial planning advice in March 2008, following his retirement and the sale of a property. Mr P had never consulted a financial planner before. Five accounts were set up and funds were placed into superannuation for pension accounts for Mr P and his wife. Mr & Mrs P each subsequently received excess contributions tax bills from the ATO. They believed this was due to incorrect advice. Their claim was for the amount of the tax bills ($13,950) and a refund of fees paid over a 3 year period ($55,222.16) giving a total claim of $69,172.16. During FOSs handling of the dispute, Mr P was diagnosed with dementia and his daughter took over his FOS dispute. The claim amount was amended several times during the FOS dispute. Case Study 3#: 231331- Conciliation

Claim Mr & Mrs P were dissatisfied with the strategy they had been put into, claiming it was too complicated and had attracted excessively high fees. They did not believe the advice was in their best interests. They were novice investors for whom English was a second language, and they had not understood the strategy. They had lost money on their investment portfolio due to the assets chosen being too risky. Case Study 3#: 231331- Conciliation

FSPs position The five accounts were necessary, as first the funds had to be placed into superannuation, then into individual pensions. This accounted for four of the accounts. The fifth account was a joint investment account, which met Mr & Mrs Ps objective of some capital growth in their investments. The fees charged were a percentage of funds under management, and the overall amount would have been the same no matter how many or how few accounts there were. The advice given had saved Mr & Mrs P tens of thousands of dollars as it was a tax-effective strategy. The FSP could demonstrate that the proper risk profiling and disclosure processes had been followed and that Mr P had agreed to the strategy willingly. The FSP disputed that Mr P was a novice investor who required capital protected investments, due to the fact that, prior to Mr P consulting the FSPs advisor, he had approximately $1 million invested in direct shares and had been trading on the share market for many years. The equities he had selected were far higher risk than those recommended by the advisor. Case Study 3#: 231331- Conciliation

At conciliation The FSP contact was able to explain to Mr Ps adult children the rationale behind the strategy, and the benefits that their parents had enjoyed, as a result of the strategy. A key stumbling block to resolution was the fact that Mr Ps family had flown to Sydney at their own expense some months earlier, in an effort to resolve the complaint, and their interactions with the FSP contact they met there had led to further misunderstandings. Following private sessions, Mr Ps family accepted that the strategy had led to significant savings on their parents part. However, they remained firmly of the view that the FSP staff member in Sydney had promised to compensate them for the tax bills their parents had incurred. Case Study 3#: 231331- Conciliation

Outcome Mr Ps family accepted that they could not substantiate that there had been a loss. They remained upset by the way the previous FSP contact had dealt with their matter. In order to achieve a resolution, the FSP offered to compensate them in the amount of $13,950 which was the amount of the excess tax bills. Both parties ended the conciliation satisfied with this outcome. Case Study 3#: 231331- Conciliation

Facts In early 2007 Mr Ts parents were tragically killed in an accident. As a result, he inherited approximately $1 million. Mr & Mrs T had never consulted a financial planner before, lived in a rented home and had never made any investments. They were referred to the FSPs advisor by a friend and an SOA was provided in August 2007. Mr & Mrs T stated that they made it very clear to the advisor that they wanted to park their money somewhere safe for about six months, while they took a holiday and thought about what to do with their money long term. In fact the funds were invested into a market-linked investment immediately and subsequently dropped in value significantly during 2008. Mr & Mrs T stated that they had been pressured into agreeing to this strategy and that the risks were downplayed in their conversations with the advisor. Mr & Mrs T felt that the strategy was inappropriate for them and the investments chosen were too risky. Case Study 4#: 235395 - Conciliation

Claim Mr & Mrs Ts claim was $190,519.56, which included interest payments on a home loan they had taken out. They stated they included this amount because the advisor had assured them that the investment strategy would provide sufficient income for the mortgage payments to be covered, and this had turned out not to be the case. Mr T was of the belief that the true losses were in the order of $300,000 because he had calculated that if they had put their original investment of $640,000 into a cash management account, they would have earned a significant amount of interest since August 2007. The FSP disputed the claim calculation methodology. Mr & Mrs T did recall having been asked questions about their tolerance to risk but stated that the significance of their responses was not explained to them. They were assessed as growth investors and they did not believe that was an accurate reflection of their attitude to risk. Mr & Mrs T felt that when they consulted the advisor, they were naive investors and were in a very vulnerable state of mind due to their recent bereavement. They stated that the strategy and investments were presented as safe and secure. Case Study 4#: 235395 - Conciliation

FSPs position The FSP noted that a thorough fact find and risk assessment process was undertaken, and that the documents had been signed. Further, the advice was clearly expressed in the subsequent SOA. The FSP believed the advice had a reasonable basis. Mr & Mrs T were seeking an analysis of the benefits of a managed portfolio as against residential property. The advice was provided with clear warnings and disclosures. The FSP stated that there had been numerous conversations leading up to and following the provision of advice, that the advice was fully explained, and that Mr & Mrs T understood and willingly approved the recommendations. The FSP stated that the losses were due to market downturn during the global financial crisis and not to inappropriate advice. Case Study 4#: 235395 - Conciliation

At conciliation Mr & Mrs T accepted that the documentation did appear to outline the benefits and risks of the strategy, and that they had signed the documents of their own free will. However, they strongly felt that, in his conversations with them, the advisor had significantly downplayed the risks. The FSP accepted that it possibly would have been more suitable to assess Mr & Mrs T as balanced investors, rather than growth investors. Discussion was had around the claim calculation methodology, and eventually the parties agreed to look at a methodology that compared the performance of a growth portfolio during the relevant period, with the performance of a balanced portfolio. Case Study 4#: 235395 - Conciliation

Outcome Both parties indicated they were keen to settle. Using the claim methodology of comparing the performance of growth and balanced portfolios, a figure of $75,000 was agreed to. The Applicants were satisfied that, taking into account all factors of their case, the settlement represented the best outcome they were likely to achieve by any means. The FSP was satisfied that it had responded appropriately and had mitigated its risks. Both parties were glad to close the file. Case Study 4#: 235395 - Conciliation

Alison Maynard - Ombudsman, Investments, Life Insurance & Superannuation Myth-busting Statistics

Disputes Received200920101/1/11- 30/6/11 Investments19132136806 Margin Loans1605434 TOTAL20732190840

Disputes Resolved 1 Jan 2010 30 Jun 2011 Investments & Margin Lending Disputes Disputes Resolved% Outside Terms of Reference334 (15) Discontinued484 (22) Agreed Resolution961 (41) Decision in favour of Applicant230 (10) Decision in favour of FSP156 (7) Other54 (2) TOTAL2,219 (100)

Outcome Amounts for decisions in favour of Applicants (1/1/10- 30/6/11) Outcome Amounts 0-50,000134 50,000 100,00032 100,000 150,00020 150,000 200,0004 200,000 250,0001 400,000 400,0001 No Claim Amount recorded24 TOTAL216 * Excludes 14 margin loan disputes not included in table

Outcome amounts for disputes resolved by agreement. Outcome Amounts 0 - 50,000456 50,000 100,00045 100,000 150,00011 150,000 200,0001 200,000 250,0003 250,000 300,0001 450,000 - 500,0002 No outcome amount recorded953 TOTAL1,472

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