Majority of Australian Financial Ombudsman Service members ready for transition to AFCA
FOS estimates that 98% percent of its members have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.
As the start of operations of the Australian Financial Complaints Authority (AFCA) – a new external dispute resolution body, approaches, Australian firms seem to be well prepared for the change. This is suggested by the latest Circular just published by the Financial Ombudsman Service (FOS).
All financial firms required to hold membership of an external dispute resolution scheme have to join AFCA by no later than September 21, 2018. FOS estimates that 98% of its members have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.
The legislation to establish AFCA passed Parliament on February 14, 2018. The new body will replace the three existing external dispute resolution schemes: the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT).
On May 1, 2018 a new operating company, Australian Financial Complaints Limited (AFCL), replaced the Financial Ombudsman Service Limited (FOSL) as the legal entity running the FOS scheme until AFCA commences accepting new disputes on November 1, 2018.
Until then, it is business as usual. Any FOS disputes that are still open at the time AFCA commences will be handled under the existing FOS Terms of Reference. All new disputes received after AFCA commences will be handled under the new AFCA Rules, which will incorporate the new claims limits and compensation caps previously announced by the government.
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.
As per rules outlined in November 2017, 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).
