When it comes to small claims, councils can't outsource their obligation to treat people fairly

Tabled in Parliament today, a new investigation report by the Victorian Ombudsman – Outsourcing small claims handling: How councils manage fairness and responsibility – looked into local councils' use of small claims handlers to manage claims for injury or property damage that fall below the excess in their insurance policy.

"Local councils provide crucial services to the community and balance complex and competing demands every day,” said Victorian Ombudsman Marlo Baragwanath. “More than half of local councils outsource the handling of small claims to private companies – but they cannot outsource their responsibility to treat people fairly.”

The investigation found that sometimes councils’ financial interests appeared to take priority over fairness, good customer service and the broader public interest.

"The community expects that councils make decisions fairly and on the merits and that they provide a fair and effective process for community members to seek review of a decision," said Ms Baragwanath.

A key issue was how councils communicated the role of the small claims handlers in the process. “Some councils presented small claims handlers as independent, without making clear that they are contracted by the council,” Ms Baragwanath said.

The investigation also found that small claims handlers and councils sometimes made unreasonable decisions about claims, demonstrated by three case studies in the report.

“Across the councils we examined, we saw examples of good practice and opportunities for fairer processes. The difference really came down to how well councils provided oversight of the small claims handlers they engaged,” said Ms Baragwanath.

The report made four recommendations and called on councils to better explain the role of small claims handlers to claimants, ensure their contracts with small claims handlers balance financial sustainability with fair and ethical outcomes for claimants, and make sure they inform claimants about their right to have a claims decision reviewed.

Finally, the report recommended that the councils involved in the case studies included in the report revisit their claims decisions with fresh eyes.

Download the report: Outsourcing small claims handling: How councils manage fairness and responsibility

For interview requests or further information:

Peter Davies – Manager, Strategic Communications
Phone 0409 936 235
Email vomedia@ombudsman.vic.gov.au