Chapter 6
Looking at the agencies
Other agencies menu: Australian Prudential Regulation Authority | Australian Quarantine and Inspection Service | Australian Securities and Investments Commission | Health and Ageing | Workplace Authority
AuStralian Prudential Regulation Authority
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, insurance companies, friendly societies and most members of the superannuation industry.
We receive a small number of approaches and complaints each year about APRA. However, in the second half of 2008–09 we received an increased number of complaints about the processing of applications for early release of superannuation.
There are a number of grounds upon which a person may apply for early release of superannuation entitlements. The increase in complaints to the office related to applications for early release made by people who were facing foreclosure or exercise of a power of sale by a lending institution with a mortgage over their principal residence. The increase in complaints may have been the result of an overall increase in applications of this type made to APRA.
The main complaint themes were processing times by APRA and the clarity of information it provided about the requirements for an application to be approved. We note that APRA has addressed the processing times and made changes to its requirements and information products during this period. We will continue to monitor the handling of early release applications over the next year.
TopAustralian Quarantine and Inspection Service
During 2008–09 the Ombudsman's office started a new compliance auditing role for the Australian Quarantine and Inspection Service (AQIS). AQIS is one of three elements within the Department of Agriculture, Fisheries and Forestry responsible for quarantine in Australia.
In June 2006 the Senate Rural and Regional Affairs and Transport Legislation Committee released the report on its inquiry The administration by the Department of Agriculture, Fisheries and Forestry of the citrus canker outbreak. The inquiry considered the 2004 outbreak of citrus canker in Emerald, Queensland. Citrus canker is a highly contagious plant disease that is not usually found in Australia. The outbreak had significant effects on the local economy and implications for Australia's biosecurity. It occurred at a farm where an employee had earlier made allegations that the farm owners and employees were involved in the illegal importation of plants from overseas.
The committee made five recommendations. One of the recommendations was that 'twice a year, the Commonwealth Ombudsman review all investigations carried out by AQIS to assess whether they have been conducted by appropriately trained staff, in a timely manner, in accordance with all the relevant legislation and according to the rules adopted by AQIS' executive'.
The office received additional funding in 2008–09 to begin implementing the committee's recommendation. Our approach to this function is to first undertake a broad investigation of AQIS's Compliance and Investigation Unit (CIU) processes. The CIU undertakes investigations into alleged breaches of the quarantine system, where offenders may be subject to prosecution by referral to the Commonwealth Director of Public Prosecutions, or be issued with a letter of warning or letter of advice.
In February 2009 we commenced an own motion investigation into the CIU's policies, procedures, case management systems and quality assurance processes. The report of this investigation will be released in August 2009. We plan to follow this with a series of reports focusing on individual CIU investigations.
Australian Securities and Investments Commission
The Ombudsman's office received 144 approaches and complaints about the Australian Securities and Investments Commission (ASIC) in 2008–09.
The main themes in the complaints were:
- the imposition of late review fees for late notificaton of changes to company details in response to a company's annual review
- the quality of reasons given for decisions not to investigate complaints about companies and for decisions on requests for waiver of late fees
- communication and registry issues.
A number of companies, mostly small businesses, complained that they had received invoices for late review fees accumulated over a number of years. These fees related to the failure of the companies to provide information which they believed they had already given to ASIC. We found that the problems arose as a result of changes made under the Corporations Legislation Economic Reform Program (CLERP 7) in 2003. CLERP 7 abolished the requirement to lodge annual returns and introduced a new annual review process.
The companies that complained to us had provided the information prior to the CLERP 7 changes, but at that stage ASIC did not need to capture the data and did not save it on its database. Once ASIC was required to capture the data as a result of the CLERP 7 changes, it included a note in its new annual company statement format that it had no record of the information. However, the companies overlooked the note. The late fees only became due when the information was lodged, but increased with each unmet 'request' made by way of a note on a company statement. The result was that the companies were not specifically warned that the amount of fees payable on lodgement was growing.
We raised with ASIC whether it had failed to:
- give prominence about the requirement to provide the information
- follow up companies and advise them that the information remained outstanding and that the fees due on lodgement were increasing
- consider each request for a fee waiver on its individual merits and to provide proper reasons for decisions.
Issues of a different kind arose in some other complaints about late fees. We raised with ASIC issues about the adequacy of the electronic notification to companies that the online annual company statement was ready for viewing, the design of the fee invoice, and the order in which payments made by companies were allocated to reducing accumulated charges or to meeting the current fees.
Towards the end of 2008–09, ASIC advised us of a range of measures relating to late fees, including:
- a review of all other similar cases affected by the CLERP 7 changes and an improved notification to those companies
- improvements to the manner of notifying companies that the annual company statement is available for viewing online
- improvements to the design of the fees invoice so that it is clearer when fees must be paid, in order to avoid further fees being incurred
- allocation of payments first to paying any outstanding annual company review fees rather than the oldest amount owing, in order to reduce late fees on the outstanding annual review fees
- steps would be taken to provide better reasons for decisions on requests for waiver of fees.
We will monitor the progress of these proposed improvements.
Health and Ageing
In 2008–09 the Ombudsman's office received about 150 approaches and complaints about the Department of Health and Ageing and associated portfolio agencies such as the Therapeutic Goods Administration (TGA).
The main complaint issues were:
- investigations conducted by the department's Aged Care Complaints Investigation Scheme (CIS) about the quality of care in residential aged care facilities
- access to pharmaceuticals on the Pharmaceutical Benefits Scheme or other programs
- investigation decisions and processes of the TGA, including access by complainants to information about investigation results.
Aged care
The Aged Care Act 1997 establishes the position of Aged Care Commissioner, whose functions include the examination of complaints about investigations undertaken by the CIS. The Aged Care Commissioner may make recommendations to the Department of Health and Ageing.
The Ombudsman and the Aged Care Commissioner have a memorandum of understanding which provides that, unless there is reason to do otherwise in a specific case, the Ombudsman's staff will advise people whose complaints might be dealt with by the Aged Care Commissioner to raise their complaint with the Commissioner in the first instance. However, we will consider investigating complaints about the processes adopted by the Aged Care Commissioner or complaints about the department's response to recommendations made by the Aged Care Commissioner.
The case study Reviewable decision shows how, as a result of an Ombudsman office investigation, the department changed its view on dealing with complaints about classifications under the 'residential classification scales' (RCS). The RCS was used to set the level of Commonwealth government subsidy payable to a facility for a resident's care. The subsidy payable affected the level of any income–tested fee payable by a resident to a facility if Centrelink had assessed their income as being above a threshold amount. If an income–tested fee was payable, the government subsidy reduced accordingly.
Reviewable decision
Mr M was a resident in an aged care facility. On entry to the facility Mr M was given the lowest classification on the RCS. Mr M had been assessed by Centrelink as eligible to pay an income–tested fee. However, as no government subsidy was payable for the lowest RCS classification, Mr M was not required to pay the fee.
The next year the facility reviewed Mr M's classification and gave him a higher classification. He was not advised until the Department of Health and Ageing wrote to him saying that he was now required to pay an income–tested fee for his care. Mr M disputed the new classification. Mr M encountered delays in the handling of his initial complaint and eventually the department advised him that neither the CIS nor the Aged Care Commissioner could consider the matter because it concerned funding rather than care matters. The next year the facility returned Mr M to the lowest classification, which supported his view that the intervening classification had been incorrect. Mr M then complained to us.
In response to our initial enquiries, the department advised us that the CIS could not review RCS classifications because they were a matter between aged care providers and the department for the purpose of determining subsidies and they did not concern the health, safety and wellbeing of residents. The department advised that its RCS review process examined how care providers applied the RCS by risk–based sampling to ensure classifications were made properly.
We considered that the RCS classifications were administrative decisions that had a direct effect on individuals and that a person should be able to seek review of an unfavourable RCS classification. On reconsideration, the department advised that it was possible to view the RCS classifications as decisions about the amount of service to be provided to a person, and from this perspective the CIS could investigate such decisions to see if a person was being over–serviced or under–serviced. The department will treat future complaints about RCS classifications from residents in this way.
The CIS investigated Mr M's complaint and found that the facility had incorrectly classified Mr M during the intervening year. The residence agreed to refund the income–tested fee Mr M paid during the year he was classified at the higher level.
Special access program
From late 2008, we began to receive complaints from medical professionals and parents of children who had applied for, or had access to, government–subsidised human growth hormone treatment under the special access program for human growth hormone as a pharmaceutical benefit. The complaints raised a number of administrative issues with the program including:
- delays in decision making affecting supplies of the medication, which could interrupt treatment
- onerous administrative processes for medical professionals and parents, including a requirement that parents complete statutory declarations if they had used up all the supplies earlier than expected by the department
- lack of consultation and communication.
We raised these issues with the department. The department promptly resolved the decision–making and supply issues by increasing staffing in the program unit and improving priority setting. The department also advised that it was implementing a range of other improvements to the program, including reviewing the application and information requirements, developing educational material for the families of patients, improving communication and consultation with medical professionals, and dispensing with the statutory declaration requirement.
We continue to monitor the issues raised by these complaints.
Information about TGA investigations
A common theme in complaints we receive about regulatory agencies is that the people who complain to such agencies do not always get detailed feedback about the results of their complaints. In some cases agencies take an unduly narrow view on what information they can provide to people who have complained to them. In other cases there may be specific reasons, such as not wanting to prejudice an ongoing investigation. The case study Not registered shows one such example.
In other cases we have found that information could not be disclosed to complainants because it contained confidential commercial material about other businesses. However, both types of information can be provided to the Ombudsman's office, so that we can monitor the reasonableness of the TGA's actions.
Nevertheless, it is important that agencies consider in each case what information can be disclosed to complainants when advising them of the outcome of their complaints.
Not registered
Mr and Mrs N were importers of complementary medicine products. The TGA advised them that a particular product was not included on the Australian Register of Therapeutic Goods and therefore could not be sold as a complementary medicine in Australia.
Mr and Mrs N agreed to not sell the product in Australia but were concerned that it appeared that competing businesses continued to do so. They felt that if their competitors were not pursued, those businesses that wished to sell the product legally and therefore sought its inclusion on the register would be at a commercial disadvantage. While Mr and Mrs N would need to put their business on hold and go through the costly approval process to be able to sell their product, others could continue business and possibly benefit from any approval Mr and Mrs N obtained. Mr and Mrs N provided information to the TGA about websites that they had seen advertising the product for sale to Australian customers. They later complained to us that the TGA did not appear to be taking any action.
On investigation, the TGA advised us about the action it was taking and some of the challenges it faced involving regulation of products that may be advertised on websites based overseas. While the TGA was taking action, it could not advise Mr and Mrs N of the details because the information might affect its ongoing investigations.
We were able to review the information and advise Mr and Mrs N that the steps taken by the TGA were not unreasonable, without disclosing the confidential information.
Workplace Authority
One of the roles of the Workplace Authority during 2008–09 was to assess workplace agreements for compliance with the 'fairness test' under the Workplace Relations Amendment (A Stronger Safety Net) Act 2007 (the Act).
From late 2008 we received a number of complaints from employers that they had been given 14 days to respond to notifications that their workplace agreements did not comply with the fairness test. In response to the notifications, employers were required to either vary the agreement, or to lodge undertakings to vary the agreement, so that it complied with the fairness test. If this did not occur, or the varied agreement still did not pass the fairness test, the agreement would be terminated and the conditions applying to the employees under their last industrial instrument would be revived.
Once notified of the outcome of an assessment under the fairness test, an employer had a further 14 days to calculate and pay any compensation due to employees arising from the period of non–compliance with the fairness test. Under the Act sanctions of up to $30,000 could be imposed for non–compliance with the requirement to pay compensation within this 14–day period.
The 14–day time periods were prescribed by the Act. While the Act provided for the making of regulations to enable the extension of the initial 14–day period, none were made. This meant the initial 14–day period could not be extended.
A number of employers complained that they received notifications that their agreement did not pass the fairness test some 12 months or more after lodging the agreement for assessment. While lodgement receipts advised that they would be contacted about the outcome of the assessment, some employers believed the absence of contact from the Workplace Authority meant their agreements were compliant and were surprised to be notified a year later that this was not the case.
During this period the law had changed and the employers required time to obtain advice about whether to vary their agreements or allow them to terminate and make new agreements under the new laws. Moreover, due to the passage of time, calculation of compensation had become more onerous as some employees covered by the agreements were no longer employed by the employer who lodged the agreement and the volume of employer records had increased. Still others complained that the unanticipated need to pay compensation within such a short period gave rise to cash flow problems.
On investigation of the complaints the Workplace Authority advised us that:
- the fairness test had been introduced on 1 July 2007 but covered agreements made from 7 May 2007 onwards, immediately creating a large and continually growing amount of work for the Authority
- the Workplace Authority did not have adequate systems to track all agreements through the assessment process until November 2007
- in mid–2008 an audit discovered a cohort of agreements lodged before November 2007 for which assessments had not been finalised
- there was no process for advising the employers, whose agreement assessments had not been finalised, of the delay and what this meant for them
- all fairness test assessments were finalised by 19 December 2008
- the replacement 'no disadvantage test' legislation provides longer timeframes
- the Office of the Workplace Ombudsman, which was responsible for enforcement of non–compliance with the requirement to pay compensation, was aware of the delays in assessments.
The time periods in the Act were clearly set in anticipation of the assessments being processed over a much shorter period of time than eventuated. Upon discovering the delayed cases, the agency should have written to the employers advising them of this fact and when they might expect notice of an assessment. We were advised by the Office of the Workplace Ombudsman that it would take into account all matters raised by employers in regard to compliance timeframes and that the impact of the delays could be addressed through negotiated payment plans where necessary. Nevertheless, it remains a concern that the delays will have caused problems for a number of employers in the form of increased compliance costs and inconvenience.
We understand that the Workplace Authority will continue to assess agreements made before 1 July 2009, union collective agreements made before 30 September 2009 and individual transition employment agreements made before 31 December 2009 under the 'no disadvantage' test, up until 31 January 2010. The Workplace Authority's other functions transferred to Fair Work Australia and the Fair Work Ombudsman from 1 July 2009.
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