Procedural Fairness: Striking the Balance

1. Procedural Fairness: Striking the Balance Elisabeth Wentworth Banking and Financial Services Ombudsman Ltd National Consumer Congress March 2007

2. Aim • Better understanding of the components and psychology of fairness • Some tips for self-testing • Outline of a training program that can be used in different contexts

3. Overview • Procedural fairness – what is it? • Who is it an obligation for? • Why is it important? • Drilling down into the practicalities • Understanding bias • Some tips • Fair hearing • Training decision-makers in fairness

4. What is it? • A legal rule of decision-making in courts and tribunals • An obligation on other decision-makers whose decisions significantly affect the interests of the parties • A stated criteria for IDR and EDR processes • A human expectation in the resolution of conflict • Two main components: No bias, real or apparent; and a fair hearing

5. Who needs to know about it? • Embedded in the dispute resolution framework for consumer protection • Internal dispute resolution: Australian standards for complaint handling AS 4269 [fairness] and AS ISO 10002 [objectivity] • External dispute resolution systems DIST Benchmarks; ASIC Policy Statement 139 (financial services) • Industry participants: codes • Government agencies

6. AS ISO 10002: complaint handling • Replaces ‘fairness’ with ‘objectivity’ • Useful definition: ‘equitable, objective and unbiased’ • Components include: • Openness – clear & well publicized processes • Impartiality – avoiding bias • Accessibility – access & information • Completeness – talk to both sides • Equitability – equal treatment

7. Why is it important? • Risk management • May be a legal obligation • Enhances reputation and trust • Fair processes and communications are more efficient • Not confined to the giving of a formal decision - every interaction with the parties counts

8. Understanding Bias • The psychology of bias is a rich field of research • Decision-making bias includes identified categories such as: • Confirmation bias • Disconfirmation bias • Bias blind-spot

9. ‘I’m not biased’ – tricks the mind plays • Human brain can play many tricks in order to drive us to the conclusion we favour • The example of the bathroom scales • Underestimating our own biases, overestimating other people’s biases • Unconscious attitudes and beliefs v expressed attitudes

10. The practicalities: No Bias • Indications of apparent bias • Premature expression of hostility • Labelling of one of the parties • Putting one party ‘through the hoop’ on proof v uncritical acceptance of other party’s claims • Using different forms of address, different levels of familiarity • Listening differently

11. Some Tips • Don’t react prematurely: wait until you hear both sides • Be aware of feeling cross or irritated • Do a mental check – favourable picture of one party v unfavourable picture of the other? • Check that your questioning of the parties is balanced

12. Some tips (cont) • Check that the tone of your conversation is the same with both parties and is not mirroring the tone and language of one • Check your listening – are you going through the motions with one party? • In written communications trust your doubts about a word or a phrase, check with a colleague, take it out

13. Components: fair hearing • Reasonable opportunity to be heard • sufficient opportunity to present case - may include an extension of time or adjournment where appropriate, • notice of other side’s submissions and the evidence and the opportunity to respond • evidence contradicting the evidence of a witness or leading to criticism must be put to the witness to give them an opportunity to respond,

14. No evidence* • Decision– must not ‘come out of the blue’ or be perverse • Not mere speculation or suspicion unsupported by evidence • Inferences may be drawn but must have some basis for drawing them • Decision must not be so unreasonable that no reasonable person could have made that decision

15. Avoiding an irrational decision • Is the decision logical and cogently presented? • Are the reasons for the finding clear? • Has all relevant information been considered? • Are the findings of fact based on, and consistent with, the objective information? • Has the balance of probabilities test been applied correctly?

16. Training in procedural fairness • Identify the source and content of obligations • Explain what the obligations mean in practice • Use illustrations from a range of decision-making contexts • Recognise the challenges

17. Conclusion • Fairness is a state of mind and a style of communication reflecting that state of mind • Keep an open mind, maintain even-handed, courteous communication and avoid appearance of prejudgment • Step back from the emotions and language of the parties • Get into the habit of self-checking • ‘Injustice is easy. Fairness takes hard work.’