Financial Complaints Authority update

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 has been introduced into the Senate but with only two parliamentary sitting weeks left this year the Bill might not be further considered this year given the Government’s loss of at least one member and two senators due to section 44 of the Constitution and the Opposition’s determination to establish a Royal Commission into financial services and its possible opposition to the Authority. Background.

UPDATE 9 December 2017: the Bill was passed by the Senate on 6 December 2017 and introduced into the House of Representatives on 7 December 2017. The Senate amended the Bill to provide additional certainty in relation to the handling of superannuation disputes, to review AFCA’s operations after a period of 18 months from its commencement, and to enshrine in legislation the requirement that the AFCA Chair be independent.

UPDATE February 2018: Bill passed.

Nevertheless, with a view to the Authority commencing on 1 July 2018 the Minister for Revenue and Financial Services has established a Transition Team led by Dr Malcolm Edey to manage the transition to AFCA from the three existing external dispute resolution schemes (the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal).

Dr Edey will advise the Minister on key elements of AFCA’s operations, including its terms of reference, governance and funding arrangements, to assist the Minister in her decision to authorise the AFCA scheme. This may include advice on conditions of authorisation.

The AFCA Transition Team has published a Consultation Paper on key issues that are not yet settled.

Issues that have already been settled by the Government’s endorsement of the Ramsay Review recommendations will not be re-opened.

AFCA’s operational rules will be set out in its terms of reference, which will be considered by the Minister as part of the authorisation process.

Prior to commencement, there will be consultation on whether consumer disputes relating to certain products, including mortgages and general insurance products, should move immediately to a compensation cap of $1 million from a minimum $500,000 compensation cap.

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