The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 has been welcomed by the industry after passing both houses of parliament.
The bill is set to amalgamate the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal (SCT), and the Credit and Investment Ombudsman (CIO), forming the Australian Financial Complaints Authority (AFCA).
AFCA is designed to serve as a “one-stop shop”, enabling consumers to resolve disputes arising from their dealings in the financial services sector.
Deputy chair of the Australian Securities and Investments Commission (ASIC) Peter Kell endorsed AFCA, adding that he believes it will produce “higher standards and better outcomes”.
“Fair, timely and effective dispute resolution is a cornerstone of the financial services consumer protection framework,” the deputy chair said.
“The combination of [the] firms’ internal dispute resolution procedures and access to a free independent external scheme currently provides redress for many tens of thousands of Australians each year. Strengthening these dispute resolution requirements will help deliver higher standards and better outcomes in the financial services market.”
Likewise, Minister for Revenue and Financial Services Kelly O’Dwyer welcomed the bill’s passage, adding: “AFCA will provide a one-stop shop to ensure consumers get a fair deal in resolving disputes with banks, insurers, super funds and small amount credit providers, without the expense, inconvenience and trauma associated with going to court.”
Chief executive officer of the Australian Bankers’ Association (ABA) Anna Bligh said that she believes the introduction of AFCA was a “common sense reform”.
“A quick resolution of any dispute between a customer and financial institution is in everyone’s best interest,” Ms Bligh said.
“When a complaint needs to go further, it’s important the process is simple, fair and results in a speedy outcome.
“Merging three complaints authorities into a ‘one-stop shop’ is common sense reform and should lead to speedier resolution of issues experienced by Australian bank customers.”
Meanwhile, FOS chief ombudsman Shane Tregillis claimed that AFCA could help boost access for dispute resolution services.
“The establishment of AFCA will simplify, strengthen and increase access to free external dispute resolution for individuals and for small businesses,” Mr Tregillis said.
The government has committed to allow disputes to be heard through AFCA by no later than 1 November 2018.
ASIC has noted that until such time, it would work with the government to ensure a “smooth transition” and noted that it would retain direct oversight over the FOS and CIO until 1 November.
Moreover, the government has said that it intends to simplify small business access to AFCA by:
- relaxing the definition of a small business, so that any business with fewer than 100 staff can access AFCA;
- enabling small business primary production producers to access compensation of up to $2 million for disputes about credit facilities of up to $5 million;
- increasing the cap on income stream insurance product disputes from $8,300 to $13,400 per month;
- increasing the cap on uninsured third-party motor vehicle claims from $5,000 to $15,000; and
- increasing the separate compensation cap for general insurance broker disputes from $174,000 to $250,000.