Coming into effect on 1 November 2018, the Australian Financial Complaints Authority (AFCA) will be a 'one-stop-shop' external dispute resolution (EDR) scheme in Australia replacing the two existing schemes of the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman (CIO), in addition to the Superannuation Complaints Tribunal (SCT).
What's new?
On 13 September 2018, the Australian Securities and Investments Commission (ASIC) approved the draft AFCA Rules setting out the rules and processes that apply to all complaints submitted to the AFCA scheme.
In bringing the existing EDR schemes together under the same roof with a single EDR framework the Australian Government has adopted one of the key recommendations of the Ramsay Review which identified a lack of consistency across the prior EDR schemes. This had commonly resulted in similar complaints made under the different schemes failing to achieve the same outcome.
In addition to promoting consistency, other key differences include:
- a significant increase in the monetary jurisdictional limits with the majority of non-superannuation disputes now with a dispute limit of $1 million and a compensation cap of $500,000, significantly higher than the compensation cap of $323,500 under FOS.
- a requirement that AFCA has an independent assessor to review complaints about service issues in AFCA's dispute handling. Although not new to FOS, it will be for CIO and SCT and is intended to promote transparency within the scheme.
Making the transition
Those financial services providers that are required to become AFCA members, such as Australian Financial Service Licensees, must register with AFCA by 21 September 2018.
Complaints made to the existing EDR schemes before 1 November 2018 will be transferred to AFCA, however will continue to be adjudicated under the original EDR Terms of Reference/Rules applicable at the time the complaint was made.
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