26th Oct 2018
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New body ready to judge 1000 complaints in one week
Author: Olga Galacho
New complaints body for financial services

The long-awaited one-stop shop for consumer complaints about superannuation, insurance and financial services providers will open on Thursday.

Given the evidence that has so far emerged from the Royal Commission into Misconduct by the Banking, Superannuation and Insurance sectors, it is likely the new ‘ombudsman’s’ in-tray will soon begin to overflow.

Known as the Australian Financial Complaints Authority (AFCA), it is expected to be able to process at least 1000 complaints in the first week.

The authority’s chair, Helen Coonan, told Investment Magazine “some of the fallout from the royal commission”, should lead to “a big spike in complaints”.

“We’re trending to 55,000 (cases) by next year and about 38,000 members, so you can appreciate from the magnitude of those numbers that a lot of it will come out of heightened awareness from the royal commission,” Ms Coonan said.

“But we’re ready for this. We’ve done a lot of work to get our rules in place, to have our funding model right and to have a very good board.”

AFCA replaces the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).

Any complaints already raised with the SCT will not be heard by the new authority, and any cases raised from 1 November must be referred to AFCA.

The authority will be funded from levies and fees from financial institutions  required by law to become members of AFCA.

It told prospective members that it wanted to have sufficient funds to handle 1000 complaints in the first week of operation.

Failure to join AFCA would mean that credit and other organisations would lose their licence to trade.

Corporate watchdog the Australian Securities and Investments Commission (ASIC) is monitoring the sign-up and contacting the organisations which have not yet registered.

AFCA chief executive David Locke says the new financial ombudsman will be faster, nimbler and, more importantly, tougher than its predecessors when it opens for business on Thursday, the Australian Financial Review (AFR) reported.

“It's hard to make generalisations but at times in the past some of the financial institutions have not taken the ombudsman as seriously as they should,” Mr Locke said.

“The new entity will have enhanced powers, a bigger remit and more resources than its predecessors,” the AFR reported. “This will enable customers with disputes over large sums to have their cases ruled on by an independent third party without the cost of going to court.

“It can also award greater compensation than the old regime. For non-super matters its threshold for the value of disputes it can review increases from $500,000 to $1 million and the compensation it can order rises from $350,000 to $500,000,” the newspaper revealed.

The authority employs more than 500 staff, has 18 ombudsmen and 14 adjudicators, dozens of lawyers, accountants and dispute resolution experts.

Mr Locke, a former assistant commissioner of the Australian Charities and Not-for-Profits Commission, told the AFR he wanted to “shrink the business, not grow it”.

He is also a supporter of a compensation scheme to help individuals who have lost their livelihoods as victims of misconduct.

“So even though we've concluded that there was misconduct and have reported matters to the regulators there are these people who are left without anything. And if you look back over the last eight years there's $16.5 million in claims from 270 individuals that haven't been settled.

“We think there is a very real need for a compensation scheme that would ensure that people in that situation do get the redress they need … Commissioner Kenneth Hayne has raised the question in the interim report and we believe strongly there should be and will be making a submission to that effect.”

AFCA is headquartered in Melbourne. For more information visit www.afca.org.au or contact 1800 931 678. For SCT information visit www.sct.gov.au or contact 1300 884 114.

Have you been waiting for the new complaints body to become established before formally making a complaint about your financial services provider?

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    COMMENTS

    To make a comment, please register or login
    Bruce
    30th Oct 2018
    10:09am
    So the good. Will have to finance the bad. Fees from super companies will be extracted from members.
    Here we go again. The honest subsidising the theieves.
    Oldpom63
    30th Oct 2018
    11:09am
    Will it be able to help British ex pats with their problems?
    KSS
    30th Oct 2018
    12:17pm
    Probably not if the problem originates in the UK. Different country, different rules.
    floss
    30th Oct 2018
    11:41am
    And when it is a going concern sell it or use a over seas call centre that way you can replace all the Australian workers that pay tax and spend their money to benefit Australia.
    anonysubscribe
    30th Oct 2018
    12:13pm
    AFCA replaces the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).
    the FOS showed clear bias in 3 cases I referrred to it. It was staffed by 'mediators' who proudly admit that they are not experts in the technical fields they arbiter. even when I provided extensive research which could have been useful in educating them into their legal and skill requirements, they systematically ignored it. when they gave decisions in my favour they diluted their effects by claiming I was almost a sophisticated investor. there is no such category in the corporations act. when I asked them to review my case under fact and law, they told me their constitution would not entertain any appeacls on facts or law. these people are alive and well in the new authority.
    KSS
    30th Oct 2018
    12:23pm
    I'd like to know what enforcement powers this new body has. For example you can get a compensatory ruling in your favour through State fair trading but if the compensation is not paid the tribunal cannot enforce their own rulings. You have to take court action. Will this be the same, just on a national level?
    TREBOR
    30th Oct 2018
    5:21pm
    They don't have that issue with CS arrears and Centrelink 'debt' - they just levy it or take it through the ATO.
    pedro the swift
    30th Oct 2018
    3:15pm
    So "forced to join". "funds levied from organisations"? Sounds like another scheme to raise taxes on the sly. And where are theses extra costs coming from? The people who use these organizations of course.
    The existing regulators cannot do the job so lets set up another body of seatwarmers at the industrys cost. And we wont give them too much power anyway just enough to gouge levies from the industry.
    How many more useless Acronym bodies do we need to employ all these over abundant useless uni graduates who cant get a job in the real world.
    Erin
    31st Oct 2018
    5:55pm
    I didn't complain about 'fees for no service' until mid July 2018, because I trusted the Commonwealth Bank. They made me an offer but when I asked if it included interest i.e. the current Reserve Bank rate of 0.5% + 6% as stated by the Royal Commission, or compensation, they stated that I was not entitled to either. It took me three weeks of frustration and stress researching the web to find out if I was entitled to it. They finally gave me the interest, which they called a 'goodwill offer' and I'm still not sure that what they gave me was correct. I'm 76 and a pensioner and they knew that. I believe that this is 'elder abuse'.

    I also believe that these banks have progressed from 'banking misconduct' to 'incalcitrant conduct'.

    They were forced to pay me the interest because I sent them an email detailing everything I had been told over the phone, so it was now in writing and could be used as evidence against them. They are disgraceful and completely lack integrity.


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