Ombudsman and Dispute Resolution: How Independent Complaint Schemes Build Fairness and Trust

Understanding the Role of Ombudsman Offices and How Mediation and Conciliation Support Accountability Across Sectors

What Does an Ombudsman Do?

As a mediator, I have noticed that my conversation with individuals and small businesses in conflict often covers the possible Ombudsman processes available to disputing parties. There is quite a bit of misunderstanding as to what an Ombudsman can do, the scope of their role, and how an Ombudsman office can help in a particular complaint context. For this reason, I have written article for individuals and businesses contemplating the right dispute resolution process for them.

Having now trained staff from a range of Ombudsman organisations including the Energy and Water Ombudsman, Transport Ombudsman, Telecommunication Industry Ombudsman, Ombudsman South Australia and the Victorian Ombudsman, I have a good idea of both the range of different processes offered by Ombudsman organisations, as well as the limits of how they can assist in particular disputes.

Ombudsman Offices: The Backbone of Complaint Handling

Ombudsman organisations are the most utilised complaint-handling mechanism in the Australian government, receiving over 60,0000 complaints annually, signifying high public trust in Ombudsmen as independent agencies. 1 Their primary purpose is to provide an impartial platform for citizens and consumers to address complaints or grievances against government agencies, departments, or private sector service providers. 2 This reinforces government accountability. 3

Many of us will have engaged or at least heard of an Ombudsman service in the context of a dispute or conflict we are having with a government agency or large corporation. In this article, I provide more information about what an Ombudsman office does with a specific focus on dispute resolution processes.

Ombudsmen improve accountability and governance by:

1. Resolving individual disputes 

2. Investigating systematic problems 

3. Improved Sector Performance 4

Where a complaint is justified, Ombudsmen conduct inquiries into ‘individual or systematic cases’, seeking redress through alternative dispute resolution processes like mediation or conciliation. 5

Types of Ombudsman in Australia

There are two key types of Ombudsman offices:

1. Parliamentary Ombudsmen – funded by government to investigate complaints about public agencies.

2. Industry Ombudsmen – funded by members within a specific sector (such as telecommunications or energy) to address consumer disputes.6
   

Irrespective of type, Ombudsmen conduct thorough investigations at no cost, striving for 'fair and reasonable' resolutions. The public is entitled to expect six essential criteria from any Ombudsman office: independence, jurisdiction, powers, accessibility, procedural fairness, and accountability. 7

Why is an Ombudsman office important for ensuring industry excellence?

Industry providers, such as telecommunications, energy, and water, or insurance, must belong to an independent dispute resolution scheme - typically an industry-funded Ombudsman. 8 These Ombudsman offices are overseen by a Board or Council comprising industry and consumer representatives, as well as an Independent Chair. 9  Industry-based Ombudsmen are crucial for maintaining industry integrity and standards of excellence. They provide a free, impartial, informal, and swift alternative to the often lengthy and costly legal avenues. 10 Their responsibilities include independent investigations of consumer complaints against the industry, often highlighting systematic issues within industry processes. 11

Industry Ombudsman improve service and administration by:

• Providing an alternative to court-based dispute resolution by using non-adversarial methods like mediation or conciliation however, Ombudsman do not replace the pursuit and enforcement of rights through the courts. 12

• Conducting industry-specific dispute resolution with specialized expertise and provides independent expert information. 13

• Resolving complaints based on legal principles, fairness, and good industry practice.14

• Offering free and readily available dispute resolution services for vulnerable citizens to seek resources on matters of maladministration or misconduct, without penalties for unsuccessful complainants. 15

• Promoting accountable, lawful, fair, and responsible public administration. 16

• Developing industry and accountability policies and principles. 17

• Supporting both consumers and industry without acting as a consumer advocacy scheme. 18

• Prompting government action for beneficial legislative changes. 19

Ready to Transform Conflict into Understanding?

How do Ombudsman teams resolve disputes?

There is no uniform model for dispute resolution in Ombudsman organisations 20 Generally, Ombudsman services require complainants to attempt resolving issues with the organisation before initiating an investigation. 21 If the issue remains unresolved, the Ombudsman may investigate. Industry-based Ombudsman services accept complaints via phone, letter, fax, email, or online, while Government Ombudsman usually require written complaints. 22

The Ombudsman contacts the organisation, presents the complaint, requests a response, and offers possible solutions. 23 Staff assist both parties in resolving the complaint, typically through mediation or conciliation. 24 Complaints are generally resolved within 2 to 4 weeks; however, complex issues may take several months. 25 If negotiation fails, Parliamentary Ombudsman can make recommendations to agencies, while Industry Ombudsman can issue binding decisions on the scheme member, but not the complainant. 26

An Ombudsman and Dispute Resolution Case Example: Private Health Insurance Ombudsman (PHIO)

For example, the Commonwealth Ombudsman, in their role as the Private Health Insurance Ombudsman (‘PHIO’), has legislative authority to summon health insurers and healthcare providers to mediation. 27 This process mitigates disputes impacting consumer rights and benefits under private health insurance policies. 28

The mediation process involves both voluntary and compulsory aspects. Upon notification of a complaint, voluntary mediation initiates with the PHIO engaging with the complainant, assessing the necessity for mediation, and ensuring consumer interests are protected. 29 Following a written submission of disputed issues, the PHIO seeks information from the opposing party and may convene mediation sessions if both parties agree. 30 Conversely, compulsory mediation may be initiated by the PHIO under specific circumstances, mandating participation and requirements of ‘good faith’ efforts towards resolution. 31 Non-compliance with mediation directives constitutes an offence under section 20Y (4) of the Act. 32

Mediation involves the Ombudsman or an appointment third-party mediation, with associated costs covered by the PHIO. 33 Throughout the process, agreements between insurers and healthcare provides remain effective until the termination of mediation, ensuring consumer protection. 34 Following mediation, reports detailing settlement terms are submitted to the PHIO, who oversees compliance and may make recommendations to relevant authorities in cases of non-compliance. 35 Within this process, the PHIO prioritises complaints and expects prompt responses from involved parties. 36

Why Ombudsman Processes Matter

Ombudsman services strengthen democratic accountability, protect consumers, and promote lawful, fair administration. They bridge the gap between the public and the system, providing an essential safeguard against poor service or maladministration.

List of Ombudsman Organisations in Australia: 37

You can read more about my conciliation services.

If your team handles complaints that may end up with an Ombudsman, send me an enquiry and we can talk through what would help.

References

1 John McMillan, ‘The Ombudsman and the Rule of Law’ (Discussion Paper, No 44, AIAL Forum, 6 November

2004) 3.

2 Australian and New Zealand Ombudsman Association (‘ANOZA’), Ombudsman Services in Australia (Report), 1-2 <https://www.ewon.com.au/content/Document/ombudsman_fact_sheet.pdf>.

3 McMillan (n 1).

4 Colin Neave, ‘Exploring the Role of the Commonwealth Ombudsman in Relation to Parliament’, Parliament of Australia (Papers on Parliament No 63, July 2015) < https://www.aph.gov.au/About_Parliament/Senate/Powers_practice_n_procedures/pops/pop63/c03> 5 Anita Stuhmcke, ‘Australian Ombudsmen: Drafting a Blueprint for Reform’ (2017) 24(1) Australian Journal of Administrative Law 43, 47.

6 ANOZA (n 2) 1.

7 Australian and New Zealand Ombudsman Association (‘ANOZA’), ‘Essential Criteria For Describing A Body As An Ombudsman’, Use of the Name (Policy Statement, February 2010) < https://anzoa.com.au/ws/media-library/e496946f33294277ad3974c7d27da483/2010_anzoa_policy-statement_essential-criteria-for-describing-a-body-as-an-ombudsman.pdf>.

8 ANOZA (n 2) 1.

9 Ibid.

10 Anita Stuhmcke, ‘The Relevance of Industry Ombudsmen’ (2002) 40(2) Law Society Journal 73, 74.

11 Ibid.

12 Ibid.

13 Ibid.

14 Ibid.

15 Ibid; Neave (n 4).

16 ANOZA (n 7).

17 Ibid.

18 Stuhmcke (n 10) 76.

19 McMillan (n 1).

20 Anita Stuhmcke, ‘Australian Ombudsmen: A Call to Take Care’ (2016) 44(3) Federal Law Review 531, 531.

21 ANOZA (n 2) 2.

22 Ibid.

23 Ibid.

24 Ibid.

25 ANOZA (n 2) 2.

26 Ibid.

27 Commonwealth Ombudsman, ‘Mediation Guidelines’, Private Health Complaints Industry Resources (Guidelines, May 2020) 1, 1 https://www.ombudsman.gov.au/__data/assets/pdf_file/0030/29847/PHIO-Mediation-Guidelines-May-2020.pdf; Ombudsman Act 1976 (Cth) Part IID, Division 5.

28 Commonwealth Ombudsman (n 27) 2.

29 Ibid.

30 Ibid.

31 Ibid.

32 Ibid; Ombudsman Act 1976 (Cth) s 20Y (4).

33 Commonwealth Ombudsman (n 27) 3.

34 Ibid.

35 Ibid.

36 Ibid 4.

37 Productivity Commission, ‘Access to Justice Arrangements: Appendices D List of Tribunals and Ombudsmen’ (Inquiry Report No. 72, 5 September 2014) <https://www.pc.gov.au/inquiries/completed/access-justice/report/access-justice-appendixd.pdf>.