Australian Financial Services Licence holders have to co-operate with AFCA in dispute resolution
This includes making available to AFCA all relevant documents and records relating to the issues in dispute.
Australian Financial Services Licence (AFSL) holders will now be required to co-operate with the Australian Financial Complaints Authority (AFCA) in the resolution of disputes, following the Government’s implementation, through regulation, of the Royal Commission’s recommendation 4.11. The relevant announcement was made on Saturday by Australian Treasurer Josh Frydenberg.
This boosting of AFCA’s powers includes making available to AFCA all relevant documents and records relating to the issues in dispute.
Notably, the Government is extending the co-operation requirement to all AFCA members including Australian Credit Licence holders and Registrable Superannuation Entities.
This move is set to give statutory force to the promises that AFSL holders have made to AFCA, and will allow the Australian Securities and Investments Commission (ASIC) to take action if those promises are not kept. A breach of the requirement may result in a civil penalty.
AFCA has welcomed the Government’s announcement. Chief Ombudsman and Chief Executive Officer, David Locke said this was an important step in ensuring consumers and small businesses have their financial complaints solved effectively and efficiently. “AFCA already has the ability to draw adverse inferences where documentation is not provided and does so”, he added.
During the first five months of its operations, that is, the period from November 1, 2018 to March 31, 2019, AFCA received 29,873 complaints, up from the 23,681 complaints received in the first four months of its operations. Credit and general insurance topped the list of products that triggered most complaints. Investments accounted for 5% of all complaints received during the five-month period.
Membership in AFCA is compulsory for all AFS licensees, Australian credit licensees, superannuation trustees and other financial firms that provide services to retail clients. 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.