Government launches one-stop-shop for financial complaints
The Australian Financial Complaints Authority has passed through parliament after initially being proposed in the 2017 Budget.
In a big win for Australian consumers and business owners, the government's proposed Australian Financial Complaints Authority (AFCA) has passed through parliament today and set to become a reality in the coming months. The AFCA will act as a one-stop-shop for all financial complaints and disputes, and will sit independently of the banks and other financial institutions.
The AFCA was proposed by the Turnbull Government as part of the 2017 Budget in May, with the purpose of providing Australian consumers access to fair, external dispute resolution when they have an issue relating to their bank, financial institution or superannuation fund. Now a reality, the new service will provide consumers and small business owners access to free dispute resolution assistance that is external to their bank or financial institution.
The proposal of the new scheme followed a year fraught with independent reviews into the banking and finance sector which uncovered thousands of consumers who had been the victims of misconduct at the hands of their bank. This ultimately lead to an official Royal Commission into Australia's banking and finance industry announced by Prime Minister Malcolm Turnbull in November 2017.
The service will be led by the Australian Securities and Investments Commission (ASIC), and financial institutions will be required to be members of the new scheme. The minister for revenue and financial services Kelly O'Dwyer said in a statement today the fact that AFCA will be managed by an independent board will ensure more consumer complaints are heard and resolved fairly. "AFCA will provide a one-stop shop to ensure consumers get a fair deal in resolving disputes with banks, insurers, super funds and small amount credit providers, without the expense, inconvenience and trauma associated with going to court," Minister O'Dwyer said.
Small business owners to benefit from the AFCA
The Government has also increased the access of the AFCA than what was initially proposed, extending the service to small businesses with less than 100 staff. This was done by including a more flexible definition of "small business", and will allow more business owners to seek help from the new scheme. This was warmly welcomed by small business ombudsman Kate Carnell in a statement this morning.
“Small businesses do not have the time or the money to hire lawyers and challenge banks and other financial institutions through the court system. This will significantly improve small businesses' access to justice, which we raised in our Small Business Loans Inquiry last year," said Carnell.
“The AFCA one-stop-shop will be free, fast and binding, and will provide the forum where the needs of small business are understood, which we hope will significantly reduce the need for litigation. We look forward to when AFCA will open its doors later this year," she said.
The AFCA was initially proposed to commence operations from July 2018. However, it has now been delayed and set to be open to receiving disputes from 1 November this year.