The Australian Securities and Investments Commission (ASIC) has released Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority ahead of AFCA’s commencement on 1 November 2018.
The guidance paper revealed that as part of its oversight of AFCA, ASIC has a range of powers under the Corporations Act, including the power to:
- issue regulatory requirements through legislative instrument, relating to compliance with: (i) the mandatory requirements under s1051 of the Corporations Act or (ii) any of the general considerations scheme under s1051A
- issue directions to AFCA if ASIC considers that AFCA has not done all things reasonably practicable to ensure compliance with the relevant legislative requirements
- issue additional directions to AFCA to: (i) increase limits on the value of claims that may be made or the value of remedies that may be determined and (ii) take measures to ensure that the operations of AFCA are sufficiently financed (s1052BA)
- approve material changes to the AFCA scheme
ASIC has noted that it will “retain its existing guidance in RG 139 until all complaints made under the existing approved schemes, the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman (CIO), have been resolved”.
The corporate watchdog also stated: “Licensees and credit representatives must continue to maintain their EDR [external dispute resolution] membership through the transitional period, including paying membership and other scheme fees in full as required.”
ASIC’s release of the guidance paper follows chair of the AFCA board Helen Coonan’s recent announcement that David Locke will serve as both chief ombudsman and chief executive officer of the dispute resolutions body from 25 June.
AFCA is the new financial dispute resolutions body, which amalgamates the Financial Ombudsman Service, the Superannuation Complaints Tribunal (SCT) and the Credit and Investments Ombudsman.
It 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.
In total, AFCA will be governed by 11 directors, consisting of an equal number of industry and consumer directors.
The directors of the board include:
- consumer advocate Erin Turner; financial planner Claire Mackay
- equity lawyer Andrew Fairley
- lawyer, mediator and experienced advocate for small and medium-sized businesses, Alan Wein
- 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
- NAB general counsel, corporate and governance and FOS director Jennifer Derbyshire
[Related: AFCA appoints new chief ombudsman and CEO]