The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 has been introduced into the Senate. Background.
The Australian Financial Complaints Authority (AFCA) board will consist of an independent chair and equal numbers of industry and consumer directors. On establishment of AFCA the Government will be able to appoint a minority of the AFCA board, including the independent chair (but will not be able to do so on an ongoing basis).
The transition will require 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.
All new superannuation disputes from 1 July 2018 will be lodged with AFCA.
The Superannuation Complaints Tribunal will continue to operate until 30 June 2020 to resolve its backlog of legacy complaints
The legislation also includes a number of statutory provisions to ensure that AFCA has the necessary powers to effectively resolve superannuation disputes. Additional statutory provisions are required because of the complex nature of some superannuation disputes that involve third parties, such as death benefit disputes. AFCA will have the power to join third parties to a dispute, require parties to attend conciliation and require the production of documents.
AFCA will be authorised to allow prompt payment of death benefit amounts by superannuation funds, to those who may be in need.
Terms of Reference will set out how AFCA will operate.
The Government has decided that AFCA will commence operations with the following monetary limits:
• a monetary limit of $1 million and a compensation cap of $500,000 for most non superannuation disputes;
• unlimited monetary jurisdiction for superannuation disputes;
• no monetary limits and compensation caps for disputes about whether a guarantee should be set aside where it has been supported by a mortgage or other security over the guarantor’s primary place of residence; and
• a monetary limit of $5 million and a compensation cap of $1 million for small business credit facility disputes.
The Government expects that AFCA will commission an independent review of its monetary limits within 18 months of commencing operations.
Exclusions from AFCA’s jurisdiction
AFCA’s terms of reference will outline what types of complaints it is unable to hear. While this is a matter to be further considered by the AFCA transition team, the Government expects the terms of reference to exclude disputes already heard by an existing external dispute resolution scheme or by a court, and superannuation complaints that deal with the management of a fund as a whole.