The new external dispute resolution scheme is ready to take complaints from consumers and small businesses from today (1 November).
The Australian Financial Complaints Authority (AFCA) consolidates the three predecessor EDR schemes, which were the Financial Ombudsman Service (FOS), Credit and Investment Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT).
The new scheme was given final approval by the minister for revenue and financial services back in May and has since received approval from the Australian Securities and Investments Commission (ASIC).
According to a treasury statement, AFCA will provide “free, fast and binding service for all financial complaints, whether they be related to banks, credit providers, insurance companies or superannuation funds”.
All financial firms required to hold membership of an EDR were required to be signed up by 21 September.
AFCA will work with complainants and financial firms to reach fair outcomes, with a focus on delivering accessible services to meet diverse community needs, and a commitment to independent and impartial decision making.
Launching AFCA today, independent chair, the Hon. Helen Coonan said, “AFCA will play an important role in restoring trust in Australia’s financial institutions in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“We will influence reform in the financial services sector by raising standards and improving internal practices to reduce and resolve disputes.”
AFCA chief executive and chief ombudsman, David Locke added, “AFCA will provide Australians with services that are easy to use, free and efficient. We will use a range of skills including conciliation and negotiation to find fair solutions for all the parties.
“Where matters cannot be settled then we will make timely and impartial determinations based upon the evidence. Any determinations of AFCA, if accepted by the consumer or small business, is binding on the financial services firm involved.
“The official opening of AFCA’s doors is a significant milestone for the financial services sector and the consumers and small businesses who use these services every day.”
CEO of the Australian Banking Association, Anna Bligh, said banks are strong supporters of external dispute resolution and supported streamlining the process to better help customers understand where they need to go if they have a complaint.
She added, “A fast, free and binding service which deals with disputes outside of court is the best way for a customer’s issue to be heard and quickly resolved.
“The creation of AFCA as a one stop shop is an important next step for the industry as it provides customers an easy to access and easy to understand avenue for having disputes resolved quickly and fairly.
“Merging external dispute resolution schemes from insurance, banking and superannuation into one organisation will ensure there is a consistency for the customer in decision making on their issues.
“The Banking Code of Practice will be used by AFCA as the new benchmark for industry practice, considering in its investigations if a bank has breached the Code and therefore its contract with the customer."
