Australian Treasury launches consultation on new financial complaints authority
Comments are invited on the monetary limits, funding and governance of the new Australian Financial Complaints Authority, which is set to commence work on July 1, 2018.
As FinanceFeeds has previously reported, the Australian financial services sector is about to get a new external dispute resolution (EDR) body – the Australian Financial Complaints Authority (AFCA). It is poised to start work on July 1, 2018 and will replace organizations like the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
Today, the Australian Treasury published a Consultation Paper about the establishment of AFCA, soliciting comments on various topics ranging from monetary limits of compensations, to the governance of the new body. Interested parties are invited to comment on questions such as “Is it appropriate to maintain specific limits for income stream risk disputes and general insurance broking disputes?” and “Are there any other principles that may assist in ensuring AFCA provides fair, efficient, timely and independent decisions?”.
While building on the foundations of the existing ombudsman schemes, AFCA will have a number of important features. In particular, it will operate with higher monetary limits and will be more accountable to users, including by having an independent assessor to deal with complaints about its handling of disputes.
AFCA will deal with all financial disputes, including superannuation disputes, and provide access to free, fast and binding dispute resolution. Financial firms will be required to be members of AFCA, and its decisions will be binding on all firms.
AFCA will be able to hear disputes of a higher value so that more consumers and small businesses will have their disputes heard, and if they have wrongfully suffered a loss, access fair compensation.
The new body will commence operations with an unlimited monetary jurisdiction for superannuation disputes and $1 million limit on the size of non-superannuation consumer disputes (a 100% increase on the current limit), as well as a minimum $500,000 compensation cap for non-superannuation consumer disputes (a 62% increase on the current cap).
AFCA’s terms of reference will outline what types of complaints it is unable to hear. The Government expects the terms of reference to exclude disputes already heard by an existing external dispute resolution scheme or by a court, and superannuation complaints that deal with the management of a fund as a whole.
Let’s note that the existing dispute resolution bodies will continue to operate after July 1, 2018 to work through their existing complaints. Consumers will have the option to transfer their complaint to AFCA at their discretion.
The current consultation is open until November 20, 2017.
