The Turnbull government has announced it will make a number of amendments to its proposed ‘one-stop shop’ dispute resolution scheme.
Responding to feedback on the scheme, known as the Australian Financial Complaints Authority (AFCA), Minister for Revenue and Financial Services Kelly O’Dwyer listed several improvements to the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017.
AFCA will replace the three existing schemes – the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT) – and will have a monetary limit of $1m and a compensation cap of $500,000 (double the existing limits).
Key changes to the bill will confirm key legislative elements of AFCA and clarify that the transition team will work under stakeholder consultation to develop AFCA’s terms of reference, governance and funding arrangements, said O’Dwyer. These changes include:
- Allowing the Minister to appoint a minority of the AFCA board upon establishment including the independent chair
- Enshrining key features of the SCT’s complaints handling model such as the decision-making test and the unlimited monetary jurisdiction into the bill
- Requiring membership of FOS and CIO to be maintained for up to 12 months following AFCA’s commencement on 1 July 2018 to resolve any outstanding disputes
- Ensuring SCT continues to operate until 30 June 2020 to resolve its backlog of legacy complaints
- Allowing ASIC to publish internal dispute resolution data including identifying related firms to improve transparency
O’Dwyer also provided more details on its terms of reference and operating rules including building a consistent decision making process, giving financial firms one final chance to resolve disputes prior to commencing an external dispute process, and creating an independent assessor within AFCA in investigate any complaints.
To ensure that AFCA is accountable for the fees it charges to members, as a condition of authorisation, AFCA will be required to report to the responsible Minister annually on any decisions to vary fees.
“These changes provide industry and consumers with certainty on the AFCA framework and the opportunity to engage in further consultation with the transition team on AFCA’s [terms of reference]. Constructive stakeholder engagement will underpin the smooth commencement of this landmark reform,” O’Dwyer said.
The government has encouraged stakeholders to engage closely with the transition team moving forwards.
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