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Vulnerability and dispute resolution in the banking and finance sector

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Purpose
The meaning of vulnerability in the context of consumers in the banking and finance sector in Australia is poorly articulated, partly because vulnerability can be situational, can vary over time, and may be linked to financial or economic vulnerability that can impact on the capacity of a consumer to seek redress and pursue the resolution of any dispute. Whilst decisions about how to protect consumers in an increasingly complex financial environment have been the subject of recent discussion and scrutiny, there has been limited focus on how banking consumers who are vulnerable can pursue concerns that have arisen when a financial arrangement is already in place. Internal dispute resolution (IDR) processes have been set up within financial organisations to deal with such concerns, however there has been recent evidence that these have not always worked well. In addition, over the past two decades, as a result of the issues that arise with more traditional forms of litigation (primarily cost and delay), there has been an increase in the external alternative dispute resolution (ADR) process options available to banking consumers where an internal complaints process has not resulted in an agreed outcome. Concerns include that complaint and dispute settlement processes relating to banking and finance may result in outcomes that favour the stronger party in any negotiation. In this regard, the current complaint and dispute resolution framework applying to financial services disputes within Australia has been designed with significant selfregulatory and industry regulated components.
This article explores the impact of this approach and considers how vulnerable consumers can be supported within the financial and banking complaint and dispute area, by considering the broader and largely unexplored definition of vulnerability, the options presented to such consumers, and approaches that can support fair outcomes.
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Keywords: ALTERNATIVE DISPUTE RESOLUTION (ADR); BANKING AND FINANCIAL SECTOR; DISPUTES; REGULATION; VULNERABILITY

Document Type: Research Article

Publication date: March 1, 2019

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