The Australian Financial Complaints Authority (AFCA) is the new financial dispute resolution that amalgamates the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal (SCT) and the Credit and Investments Ombudsman (CIO).
AFCA is designed to serve as a “one-stop shop”, providing consumers and small businesses with access to free, fast and binding dispute resolution for complaints arising from the finance sector.
These will include complaints about financial firms including banks, credit providers, insurance companies and brokers, financial advisers, managed investment schemes and superannuation trustees.
It will operate significantly higher monetary and compensation limits for consumer and small business complainants, as well as provide enhanced access to free dispute resolution for primary producers.
AFCA will replace the two existing ASIC-approved external dispute resolution schemes — the Financial Ombudsman Scheme (FOS) and the Credit and Investments Ombudsman (CIO) — and the statutory Superannuation Complaints Tribunal (SCT).
In order to allow AFCA sufficient time to put in place the necessary infrastructure and staff to be ready to receive complaints, it will only begin accepting new complaints on 1 November 2018.
The new body will be overseen by the Australian Securities and Investments Commission (ASIC), which will oversee the operation of AFCA and receive reports including about systemic issues and serious contraventions by financial firms.
All financial firms required to hold membership of an external dispute resolution scheme will be required to join AFCA by no later than 21 September 2018. This includes trustees of regulated superannuation funds who are currently subject to the SCT.
Consumers will be able to lodge complaints with FOS and CIO up to and including 31 October 2018. Members of the SCT will also be able to lodge complaints with that body until that time; however, the SCT will continue to operate beyond AFCA’s commencement to resolve the existing complaints it has on hand. Complaints lodged with the SCT will not be transferred to AFCA.
After announcing that AFCL can operate the new body this week, Minister for Revenue and Financial Services Kelly O’Dwyer MP said that consumers and small businesses across Australia will benefit from the new authority, adding: “For the first time ever, consumers will be able to go to one place to resolve any kind of financial complaint, and the new AFCA scheme will operate under significantly higher monetary limits and compensation caps to boot.”
Ninety-eight per cent of current members of the Financial Ombudsman Service (FOS) have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.
The members of the inaugural AFCA board have also now been announced.
The new board will be chaired by former senator Helen Coonan, who will formally assume responsibility from 4 May 2018 for the implementation of the new scheme.
In total, AFCA will be governed by 11 directors, consisting of an equal number of industry and consumer directors.
Minister O’Dwyer has appointed four of the new directors of the board: consumer advocate Erin Turner; financial planner Claire Mackay; equity lawyer Andrew Fairley; and lawyer, mediator and experienced advocate for small and medium-sized businesses, Alan Wein.
The other directors of the board are insurance veteran and FOS director Robert Belleville; financial services executive and FOS director Johanna Turner; financial counsellor and FOS director Carmel Franklin; consumer advocate and FOS director Elissa Freeman; lawyer and FOS director Catriona Lower; and NAB’s general counsel, corporate and governance and FOS director Jennifer Derbyshire.
Minister O’Dwyer thanked the transition team and joint working groups for their work and welcomed the new appointments to the board, commenting: “I am confident that each board member will make a valuable contribution to guide the new authority to ensure it delivers on its important mandate,” Minister O’Dwyer said.
One of the first priorities of the AFCA board will be to commence public consultation on the AFCA terms of reference (known as the AFCA Rules) and the scheme’s interim funding model.
[Related: ASIC consults on AFCA oversight]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.