Australia’s new financial dispute resolution body gets 1,500 complaints in first week of operations
Membership in AFCA, which started operations on November 1st, is mandatory for financial firms.
The Australian Financial Complaints Authority (AFCA), which opened for business earlier this month, appears to be bombarded with calls and complaints.
The new external dispute resolution body has just provided an update on its first days of full-blown activity. AFCA says that during its first week of operations it received over 2,500 calls. The number of complaints is also impressive – 1,500. Over 42% of these complaints were credit related.
The new body has taken over from the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
Financial firms including AFS licensees that provide financial services to retail clients, credit licensees, most credit representatives, superannuation trustees and unlicensed product issuers are required by law to join AFCA. Some other firms operating under a licensing exemption may also be required to join the Australian Financial Complaints Authority (AFCA), including firms operating in the regulatory sandbox. The firms should have done so by September 21, 2018.
The Australian Securities and Investments Commission (ASIC) said in October that not all firms had acted to join the new single dispute resolution scheme.
As per the ASIC announcement from October 25, 2018, there were more than 300 licensed financial firms who are still to join, and most of these are credit licensees who were previously members of the Credit and Investments Ombudsman.
If licensees were not a member of AFCA as at September 21, 2018 they are in breach of their licence obligations and ASIC can immediately commence action to suspend or cancel their licence For credit representatives, if they are required to join AFCA but have not done so by November 1, 2018, their authorisation will become invalid and they will need to cease engaging in credit activities.