AFCA to be receiving disputes by 1 November 2018

In May 2017, Professor Ian Ramsay’s final report of the Review of the financial system external dispute resolution and complaints framework (Final Report) was released. The most significant recommendation contained in the report was to establish a single external dispute resolution body for financial and superannuation disputes to replace FOS, SCT and CIO. The Government adopted this recommendation and announced that it would establish the Australian Financial Complaints Authority (AFCA).

To view Gadens’ publication following the release of the Final Report, click here.

Since the Final Report was released, the establishment of AFCA has progressed. The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Act 2018 was passed on 14 February 2018 and received Royal Assent on 5 March 2018.

Highlighted below are some key components of the Act.

• The Minister is required to cause an independent review of the operation of the amendments made by the Act to be undertaken after 18 months. The review must take into account feedback provided by complainants under the AFCA scheme.
• The Minister is empowered to authorise, by notifiable instrument, an external dispute resolution scheme if she is satisfied that all mandatory requirements are met.
• Obligations are imposed on AFCA to ensure the mandatory requirements for the AFCA scheme are complied with.
• ASIC may issue regulatory requirements to AFCA and may also issue directions to AFCA in respect of monetary limits.
• AFCA has an obligation to report breaches to authorities.
• ASIC is authorised to publish internal dispute resolution data.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, has announced the Government is putting processes in place so that AFCA will be ready to start receiving consumer and small business disputes by 1 November 2018. The next step will be for the Minister to make an application to authorise AFCA. Following an assessment of the application, the Minister will be authorising a company as AFCA and will make formal appointments to the Board.  The AFCA Board will undertake public consultation on its terms of reference and funding arrangements, ahead of AFCA’s commencement.

Authored by:
Annette Gaber, Partner, Melbourne
Anna Koumides, Senior Associate, Melbourne