ASIC updates on intervention with firms that have no AFCA membership
Following ASIC’s intervention with entities that had not obtained AFCA membership on time 50 financial services licensees subsequently secured such membership.
The Australian Securities & Investments Commission (ASIC) has earlier today provided an update on its intervention with firms that had not obtained membership in the Australian Financial Complaints Authority (AFCA) as required under the law.
Let’s recall that, membership in the single dispute resolution scheme is compulsory for all AFS licensees, Australian credit licensees, superannuation trustees and other financial firms that provide services to retail clients.
After commencing operations on November 1, 2018, AFCA advised ASIC that 58 financial services licensees and 217 credit licensees that previously held external dispute membership with one of the previous schemes, had not obtained AFCA membership and may be in breach of their licence conduct obligations.
Following ASIC’s intervention with these potentially non-compliant financial and credit licensees:
- 50 financial services licensees subsequently obtained AFCA membership;
- 4 financial services licensees voluntarily cancelled their licenses;
- 4 financial services licensees were cancelled or suspended by ASIC;
- 131 credit licensees subsequently obtained AFCA membership;
- 38 credit licensees voluntarily cancelled their licenses, and
- 48 credit licensees were cancelled or suspended by ASIC.
‘ASIC has taken proactive measures to protect consumers from those few financial services licensees and credit licensees who were not complying with the obligations of their licence by being a member of AFCA. ASIC’s intervention means that consumers now have access to the independent dispute resolution scheme of AFCA if their complaints are not being properly considered by the financial services licensee or credit licensee,’ ASIC Commissioner Sean Hughes said.
ASIC says it will continue to work closely with AFCA to identify financial services licensees and credit licensees that are not complying with their obligations. Where entities fail to comply, ASIC will take formal action to cancel or suspend their licenses.
Earlier this year, the ASIC has demonstrated that firms’ membership in the new dispute resolution scheme is crucial. The regulator cancelled the Australian financial services (AFS) licences of two financial services providers due to their failure to become members of AFCA scheme.