The “vast majority” of financial firms will pay the same or less to the Australian Financial Complaints Authority under a new, user-pays funding model that will be implemented from July 1.
The new model was approved by AFCA’s independent board after an extensive consultation process with users of the external dispute resolution scheme and peak industry bodies.
A statement from the authority says that under the new model about 90% of members of the national ombudsman scheme will see a positive or neutral impact on total fees. The 10% of heavy scheme users, that are expected to experience an increase in cost, will do so because this more accurately and fairly reflects their usage.
It says the model minimises the cross-subsidisation across sectors that was occurring under the interim model put in place at AFCA’s inception in 2018, “…by considering both the volume of complaints registered for a firm along with the time taken to resolve them.”
The new model includes a single registration fee and a simplified complaints fee structure. All members qualify for five free complaints a year.
“Overall, 95% of licensed financial firm members of the AFCA external dispute resolution scheme will pay only their annual registration fee, which has been set at $375.55 for the coming financial year,” the authority says.
Among authorised credit representatives, 99.9% will pay $65.98 annually – steady with their annual membership levy for the past year while the superannuation levy has been abolished and super funds have been brought under the same fee structure as other scheme members – with a positive or neutral impact for most.
With regard to the consultation AFCA’s Chief Ombudsman and Chief Executive Officer, David Locke says the feedback it received was overwhelmingly positive.
“Members welcomed the fact the model rewards good complaints resolution performance, and that it apportions fees fairly based on use of AFCA’s services.
…this is a fair, transparent and equitable funding model…
He says this is a fair, transparent and equitable funding model. “Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”
AFCA’s consultation process included more than 60 meetings with peak bodies and members likely to experience a greater impact, five webinars open to all member firms, and the delivery of 11,000 individual, tailored impact assessments to financial firms.
Locke thanked AFCA members and the peak bodies for their engagement with the consultation process. “Their feedback helped us improve and refine the model,” he says.
Instalments Being Introduced Above a Threshold Amount
The feedback led to instalments being introduced for member payments above a threshold amount, and no fee being payable for complaints found, upon initial assessment, to be outside AFCA’s jurisdiction.
In addition, the five free complaints provided under the new model will not be included when AFCA calculates the user charge that applies to more frequent users of the service.
Locke noted that AFCA would continue to monitor the performance of the new model over the coming year “…including ensuring positive, fair and equitable member and complainant resolution behaviours were occurring under the new model.”
Click here for AFCA’s Funding Model Consultation Report.
