The Federal Government has announced the implementation of two measures that will expand access to redress for consumers and small business victims of financial misconduct.
Paying previously unpaid determinations
Through regulation, the Government has now enabled the payment of legacy unpaid external dispute resolution determinations.
…consumers and small businesses …will receive up to $30 million in compensation owed to them by bankrupt financial firms
Under this new regulation, the Government says consumers and small businesses that have been harmed by misconduct and received determinations in their favour will receive up to $30 million in compensation owed to them by bankrupt financial firms that the victims would not otherwise have received.
The Government also notes that it is working with the relevant agencies to ensure that these redress payments commence over the coming weeks.
Mandated co-operation with AFCA
The second measure announced by the Government is the implementation of Banking Royal Commission recommendation 4.11, which now requires financial firms, by law, to co-operate with the Australian Financial Complaints Authority to resolve disputes and complaints.
The Government noted Commissioner Hayne’s observation in his Final Report that “There is little benefit in mandating the existence of systems if there is no obligation to comply with those systems.”
In addressing this point, the Government noted this initiative “…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.”
Implementing recommendation 4.11 means AFSL holders will also be required to make available to AFCA all relevant documents and records relating to the issues in dispute.
Banking Royal Commission Recommendation 4.11 reads:
Recommendation 4.11 – Co-operation with AFCA
Section 912A of the Corporations Act should be amended to require that 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.
These measures were announced on and took effect from, 6 April 2019.
