The Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Bill 2017 has been introduced to the Parliament. The Bill delivers on a Budget commitment to establish a consolidated provider of external dispute resolution (EDR) services (discussed here) and an enhanced internal dispute resolution (IDR) framework for the financial system. Specifically, the Bill would:
- ensure that consumers and small business have free access to a single EDR scheme, known as the Australian Financial Complaints Authority (AFCA), which will resolve disputes about products and services provided by financial firms;
- require all financial firms, including superannuation funds, to be AFCA members;
- establish a new authorisation framework for the AFCA scheme, which provides the Minister (rather than ASIC) with the powers to authorise, vary, revoke and regulate the AFCA scheme;
- enhance reporting obligations and require AFCA to refer certain matters to ASIC, APRA or the Commissioner of Taxation where necessary;
- provide AFCA with the power to join third parties to superannuation complaints, obtain information and documentation and require people to attend conciliation conferences;
- require AFCA to give written reasons for any superannuation complaint determination;
- grant ASIC with a specific directions power to direct AFCA to increase some or all of the monetary limits that relate to the value of claims that can be considered by AFCA or the value of remedies that AFCA may determine; and
- require financial firms to report their IDR activities in accordance with ASIC requirements and allow ASIC to publish information it receives under new reporting requirements.
In determining whether to authorise the proposed AFCA scheme, the Minister must take into account a number of ‘general considerations’ relating to accessibility, independence, fairness, accountability, efficiency and effectiveness of the scheme. The Minister will only authorise AFCA when confident that sufficient systems and processes are in place and, if the scheme fails to meet these standards, then the Minister can revoke authorisation. The Minister can also impose conditions on the authorisation of AFCA, which the Minister stated is to ensure that AFCA is appropriately transparent (ie, by including publication requirements on any reviews of AFCA). AFCA’s determinations in relation to superannuation complaints may be appealed to the Federal Court on questions of law.