A new dispute resolution framework will attempt to resolve previous consumer concerns about tackling major financial institutions when they fail to deliver.
Described by Treasurer Scott Morrison as a ‘one-stop shop’, the Australian Financial Complaints Authority (AFCA) will take over the functions of previous bodies including the Financial Ombudsman Service the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. AFCA will deal with all financial disputes, including those related to superannuation and will require all financial organisations, including super funds, to be members.
Based upon recommendations in the Ramsay Review, the aim of the new body is to provide consumers with affordable access to a system of faster and binding dispute resolutions.
Gerard Brody from the Consumer Action Law Centre agrees the move is good one, especially the inclusion of debt management firms but cautions about confusion over the name of the new authority.
“The one stop shop announced to resolve customer disputes in the finance sector, announced in the Federal budget this week, is a sensible move. It will mean that instead of three separate schemes, we will have on national body which will help Australians get justice.
“We do have concerns about the proposed name for the body, the Australian Financial Complaints Authority. It really is an ombudsman service, and should be called that. Australians know that ombudsman are independent of industry and resolve disputes effectively.
“The scope of the new scheme seems broad, and the Government is proposing to make sure debt management firms are included – this is a good move, because at the moment if someone has a complaint with a credit repair company or debt negotiation firm, then they can be denied an accessible forum to resolve the dispute”.
AFCA will be funded by the financial services industry and governed by an independent board, with an independent chair. The new dispute resolution body is to be established by 1 July 2018.