Powered by MOMENTUM MEDIA
subscribe to our newsletter
Financial firms required by law to co-operate with AFCA

Financial firms required by law to co-operate with AFCA

AFSL and ACL holders will now be required to co-operate with the Australian Financial Complaints Authority in the resolution of disputes, following the introduction of new legislation.

In the final report for the banking royal commission, commissioner Kenneth Hayne recommended that the Corporations Act should be amended to require that Australian Financial Services Licence (AFSL) holders “take reasonable steps to co-operate with AFCA in its resolution of particular disputes, including, in particular, by making available to AFCA all relevant documents and records relating to issues in dispute”.

In the final report, commissioner Hayne noted that while the Corporations Act mandates the form of AFSL holders’ internal and external dispute resolution systems, “there is little benefit in mandating the existence of systems if there is no obligation to comply with those systems”.

Advertisement
Advertisement

The government has now announced that financial firms will be required by law to co-operate with AFCA to resolve financial complaints.

Making the announcement, Treasurer Josh Frydenberg said that the government had gone further than commissioner Hayne recommended, extending the co-operation requirement to all AFCA members including Australian Credit Licence holders and Registrable Superannuation Entities”.

Mr Frydenberg added: [This] announcement, as commissioner Hayne says, ‘…will serve to give statutory force to the promises that AFSL holders have made to [AFCA], and will allow the Australian Securities and Investments Commission to take action if those promises are not kept’.”

He emphasised that a breach of the requirement may give rise to a civil penalty.

A strong economy requires a strong, accountable financial sector that Australians can trust,” he said.

AFCA warmly welcomed the decision, with chief ombudsman and CEO David Locke saying it was “an important step in ensuring consumers and small businesses have their financial complaints solved effectively and efficiently”.

“Commissioner Hayne recommended the law be amended to require AFCA members to take reasonable steps to co-operate with us in the resolution of disputes,” Mr Locke said.

“This was an important recommendation and we are pleased that from today, financial firms will be required by law to provide all relevant documents and records relating to complaints.”

Mr Locke said AFCA expects all financial firms to co-operate fully and respond promptly and comprehensively to all requests.

“Financial firms need to act in good faith at all times, treat consumers fairly and conduct themselves ethically. This is non-negotiable,” Mr Locke said.

“If we see any failure to co-operate fully and honestly with AFCA, we will call this out in the strongest possible terms and work with regulators to see appropriate regulatory action taken.

“AFCA already has the ability to draw adverse inferences where documentation is not provided and does so.”

[Related: AFCA appoints small business ombudsman]

 

 

Financial firms required by law to co-operate with AFCA
AFCA
mortgagebusiness

Annie Kane

Annie Kane is the editor of Mortgage Business.

As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also a regular contributor to the Mortgage Business Uncut podcast.

Before joining Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Latest News

A multinational non-bank lender has commenced operation in Australia in a bid to disrupt the domestic market as it seeks to service unmet de...

Expected monetary policy adjustments in overseas markets could make it easier for banks to pass on cuts to the cash rate from the RBA, accor...

Michael Andrew, a renowned tax and business leader, has passed away. ...

FROM THE WEB
podcast

LATEST PODCAST: Broker share and Westpac U-turn

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.