The Government has released its Review of the Australian Financial Complaints Authority – Final Report and its Response.
While the overall finding of the Review is that AFCA performed well in its establishment phase, it concludes that AFCA will need to continue to develop and improve its processes as it consolidates its place in the financial system.
The Review makes 14 recommendations in total. Most of the recommendations focus on enhancements to AFCA’s transparency towards parties to a complaint, and improvements to decision making processes.
The Government has also released its response to the review recommendations including:
- In response to reports of AFCA identifying new issues which firms have not had the opportunity to address via an IDR process, the Government agrees that, it is important that firms can consider issues via IDR first, and that new issues are not added inappropriately.
- The Government agrees that complaints from sophisticated and professional investors should be excluded, as these investors are not included in the retail consumer protection framework.
- The Government supports reforms to AFCA’s funding model that reduce the burden on small financial firms and removes incentives for financial firms to settle claims that have no, little or questionable merit.
- The Government agrees to the recommendation that the National Consumer Credit Protection Act 2009 should be amended to no longer require authorised credit representatives to be members of AFCA. The Government notes that the requirement for authorised credit representatives to be members of AFCA does not enhance consumer protection or access to redress as the obligation to pay compensation awarded by AFCA remains the responsibility of credit licensees.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.