The legal profession now recognises that the insurance industry’s major dispute resolution service has gone a long way to replacing the courts as an arbiter of disputes, says Insurance Ombudsman Sam Parrino.

Speaking in Melbourne yesterday at the annual national conference of the Insurance Ombudsman Service (IOS), he said the service’s published determinations have “gone a long way to establishing the credibility of the IOS determinations as a source of law”.

“Having reached almost 25,000 determinations since inception, this constitutes a source of law second to none,” he said. “When the formal courts have addressed similar issues, there has been great comfort in the consistency of approach between the courts and the IOS decision-makers.”

But Mr Parrino says the IOS is not a regulator and the determinations don’t form binding legal precedents. “Nevertheless, those who ignore the principles on which such determinations are based are unlikely to find their positions supported by IOS and may in certain circumstances attract the attention of the regulator.”

IOS Chairman Peter Daly told the conference the financial services sector’s dispute resolution schemes are “a far cry from what was anticipated” when they were set up in the 1990s.

“Change is gathering pace, and if not acknowledged and controlled, a move away from the original purpose [of the dispute schemes] is possible, along with government intervention.”

He says while the three major schemes are consolidating, seven different financial services schemes is too many for consumers.