February 15, 2018
The legislation to create a single external dispute resolution body for financial services has passed through Federal Parliament, with the new organisation slated to start accepting complaints from 1 November 2018.
The establishment of Australian Financial Complaints Authority (AFCA) had already been announced in May 2017 (see: Government to Create Single Dispute Resolution Body) and will replace the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and Super Complaints Tribunal (SCT).
Current members of FOS and CIO will be required to retain their membership of those schemes until AFCA is operational and ASIC has asked the schemes to report organisations who fail to maintain their membership.
“Strengthening these dispute resolution requirements will help deliver higher standards and better outcomes in the financial services market”
AFCA will operate under a not for profit company, which has yet to be created, but a proposal to operate the scheme will be put before Treasury by 15 March, 2018.
ASIC Deputy Chair, Peter Kell welcomed the passing of the legislation and said it would build on the outcomes of the three existing schemes and “fair, timely and effective dispute resolution is a cornerstone of the financial services consumer protection framework”.
“Strengthening these dispute resolution requirements will help deliver higher standards and better outcomes in the financial services market,” Kell said.
The Minister for Revenue and Financial Services, Kelly O’Dwyer said the new scheme would have higher monetary limits and compensation caps and would give more consumers and small businesses access to a free and binding dispute resolution system.
“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,” O’Dwyer said.