Budget 2017: Government introduces new financial complaints authority
The Australian Financial Complaints Authority will be an external one-stop-shop for all financial services consumer disputes.
As part of the 2017 Budget, the federal government plans to introduce a new one-stop-shop to provide bank, financial services and superannuation customers access to fair, external dispute resolution.
The new Australian Financial Complaints Authority (AFCA) will handle all financial consumer disputes, and provide consumers access to fair compensation if they have suffered loss due to their financial institution.
The new financial complaints authority will provide consumers access to free, fast and binding dispute resolution that is external of their bank or financial institution, ensuring more consumers will have their complaints heard and dealt with appropriately.
Financial firms will be required to be members of the AFCA, and it will be governed by an independent board and an independent chair, and will be wholly funded by the industry.
It will be overseen by The Australian Securities and Investments Commission (ASIC) to ensure it complies with all legislative requirements.
This measure is a response to the many reviews into the banking and financial services sector over the past year that have uncovered rogue financial advisers and consequently consumers who have suffered financial loss due to poor financial advice.
“Australians need to be confident that financial services providers will serve their interests. Too often banks and the sector have not met those expectations,” the budget papers noted.
In March, ASIC revealed that throughout the course of its review, a total of $30 million was paid to 1,347 retail bank customers who suffered loss due to poor financial advice. As of 31 December 2016, ASIC has banned 26 non-compliant financial advisers across ANZ, AMP, CBA, NAB and Westpac and continues to investigate many others.
While the Labor opposition has been pushing for a for full Royal Commission into the banking sector for over one year now, there was no mention of this in last night's budget.
AFCA will commence operations from 1 July 2018, and existing bodies will continue to operate and work through their existing dispute cases after this time.