A transition team has been created to lead the establishment of the Australian Financial Complaints Authority (AFCA) to ensure the new one-stop shop for dispute resolution is operational by 1 July 2018.
The Federal Government revealed it will set up the AFCA in the Federal Budget in May.
The transition team, lead by former Assistant Governor (Financial System) of the Reserve Bank of Australia Dr Malcolm Edey, will advise the government on AFCA’s terms of reference, governance and funding arrangements. It will also recommend transitional arrangements and authorisation processes for the new body.
“Once legislation to establish the AFCA has passed the Parliament, the focus of the transition team will shift to overseeing the operational transition from the existing schemes to AFCA,” says Minister for Revenue and Financial Services Kelly O’Dwyer.
She addsAFCA will ensure consumers and small businesses enjoy “a free, fast, fair and binding dispute resolution service”.
AFCA has FOS support
Earlier, the FOS had voiced its support for a one-stop-shop for financial disputes as well as an increased jurisdiction.
“It’s early days,” John Price, Lead Ombudsman – General Insurance at the Financial Services Ombudsman said to IRP.
“We still don’t know what the structure will be in terms of decision-making and resolving disputes … but I assume the same decision-making criteria will apply – that shouldn’t change in terms of reaching decisions.”
He notes that FOS is supportive of the change which matches the findings of the Ramsey review of external dispute resolution schemes recommending a single EDR body to handle all financial disputes.
“It makes sense because it means less confusion for consumers,” Price says. “Competition between schemes, as currently exists between FOS and the Credit and Investment Ombudsman (CIO) results in duplicative costs for industry and does not achieve better outcomes for consumers. ” Part of the change means also increasing the jurisdiction of AFCA to $1 million and the power to award compensation of up to $500,000 – something Price says FOS is also supportive of.
“FOS will work with the government as best we can to assist the establishment of the new scheme. Indeed, a significant part of that will be to ensure that for consumers and members, the process is seamless.”
Keen to know how the creation of the single EDR scheme is going to impact on the industry? Find out from John Price, who will be at the NIBA Convention this September 10-12 on a panel with other regulators. Register now to “Ignite your thinking here and now”.