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Financial Service Providers Argue Criminal Proceedings Outside Ombudsman Jurisdiction

Wednesday, November 23, 2016 - Posted by Michael McCulloch

We recently received communication from the Credit and Investments Ombudsman ("CIO") that they've received reports about Financial Service Providers ("FSP's"), particularly in Queensland, filing police reports about items under lease or finance as being stolen when payment isn't received.

The action taken by the FSP's is under the Criminal Code 1899 (QLD) however the CIO remind FSP's that enforcement rights are available under the National Credit Code which would be more appropriate when enforcing a regulated credit agreement due to non-payment.

In one example a customer made a complaint to CIO, which should stop enforcement action, however the FSP argued that it was now a criminal matter and outside of the CIO's jurisdiction. CIO in response indicated that police involvement comes with a broad definition of enforcement and activity should cease while the complaint was being considered.

It remains unclear at this stage as to the final outcome of the investigation by CIO regarding the above example however as CIO have indicated, stopping a criminal investigation would prove to be very difficult and that involving police in a regulated credit agreement is not an industry best practice.

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