The Financial Ombudsman & Judgment accounts - continued....

Last week we looked in detail at the jurisdiction that FOS has on Judgment accounts.

We recently had conversations with ASIC about this. ASIC's opinion was that there are circumstances that FOS will review an account that has Judgment, despite the terms of reference outlined in last months article.

We spoke with FOS to get their view on this to try and get a definitive answer.
The broad outline of there response was to seek out the cause of the dispute, breaking it into 2 categories;

1. Negotiations on Accounts without using a legal instrument on a Judgment account
2. The use of a post Judgment legal action causing the dispute.

Dealing with negotiations on accounts without using a legal instrument, the implication was that if you were negotiating a payment arrangement with the debtor & these negotiations were not the result of a legal action undertaken (Writ, Garnishee etc) then it is within their jurisdiction.

However if a debtor was raising a matter with FOS because of a legal action undertaken such as a Garnishee against wages, then it would not be within their jurisdiction.

So what to do in the future on these accounts??
We would suggest using post judgment legal action to enforce your debts (Garnishees, Exams, Writs etc). Where a debtor phones you wanting to enter into a payment arrangement, have them attend the court and file an instalment order (though this may raise a dispute where debtors complain to FOS that you will not negotiate, and opens up another can of worms).

We add that we have not received this in writing from either FOS or ASIC. We will endeavour to keep you updated as we encounter more information / examples.