Action By Administrators to Exclude Claims Submitted by Unitholders to Financial Ombudsman Service

As per our recent Unitholder Update No. 6, the administrators are taking the highly unusual step of taking Court action in an attempt to dismiss all claims made by unitholders to the Financial Ombudsman Service (FOS). The administrators appear to be concerned that, should FOS rule in favour of unitholders, then potentially all unitholders may be elevated to the status of ordinary unsecured creditors.

It is interesting to note that the administrators have written to FOS demanding that FOS desist from investigating the claims lodged by unitholders in relation to Prime Trust. FOS has, quite rightly we believe, rejected such demands.

It is also interesting to note that the Hon Bill Shorten, the Assistant Treasurer and Minister for Financial Services and Superannuation, has reiterated that unitholders have the right to pursue claims via FOS. Mr Shorten recently wrote to a number of unitholders and stated as follows (full text of letter available from link below):

“In summary, all holders of an Australian financial services licence are required by the Corporations Act to have these [dispute] resolution systems in place. Under these requirements you need to first raise your complaint with the business or person who provided you with the products or services you are complaining about.

If you are not satisfied with the outcome of that process, and you still feel you have a case, you can then complain to the Financial Ombudsman Service (FOS) in respect of any claim you wish to pursue. FOS provides free advice and assistance to investors to help them resolve complaints and disputes regarding their financial product or service. “

The Prime Trust Action Group therefore believes that the actions taken by the administrators in trying to rule out unitholders’ FOS claims are ill conceived. The Action Group also notes that the administrators (and their legal advisers) are incurring substantial expenses in this matter and believes that these costs are being incurred unnecessarily. Should the Court action brought by the administrators be decided in favour of unitholders, the Action Group believes that it would be inappropriate for such unnecessarily incurred costs to be borne by unitholders.

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