A new independent body has been established to help consumers seek justice if they believe they have been treated unfairly by banks, insurers and other financial services providers.
November 1 marks the launch of the Australian Financial Complaints Authority (AFCA), a new “one-stop shop” for Australian consumers to resolve problems with various providers.
AFCA was first proposed by the government on May 9 last year, and brings together three previous dispute-resolution bodies: the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal.
The body will provide consumers with access to “free, fast, and binding” dispute resolution for financial services complaints, according to federal Assistant Treasurer Stuart Robert.
“Australian consumers and small businesses will be spared the expense and inconvenience associated with taking financial complaints to court, with the Coalition government’s Australian Financial Complaints Authority opening for business,” he said.
What exactly is AFCA?
Speaking to The New Daily, AFCA chief executive David Locke said bringing these services together would make the complaints process less confusing for consumers, who can bring their problem to the one organisation instead of needing to work out which of the old regimes best suited their complaint.
AFCA also has higher monetary limits on the cases it can take on, and can award larger compensation amounts than its predecessors were able to.
“You don’t have to come to us [if you have a complaint], but if you want to you can, and it’s an alternative to going to court,” Mr Locke said.
The organisation expects to handle more than 55,000 cases in its first year.
Consumers who have a complaint with their financial institution, be that a bank, a super fund, or an insurance company, should first take the complaint to that business and try to resolve it directly, but if the outcome of that isn’t satisfactory, they can reach out to AFCA.
Once a complaint is filed with AFCA, which can be done using a form on the organisation’s website, an AFCA representative will reach out to the relevant financial service provider and try to arrange a settlement.
“It may be that an individual has had no joy, but when it comes to us, the financial firm might come to the table and sort [the dispute] out,” Mr Locke said.
If a settlement cannot be reached, the case passes on to one of AFCA’s case analysts, who are tasked with finding a solution that’s “fair in all the circumstances”.
The consumer who made the complaint then has the option to either accept AFCA’s proposed settlement (which is then binding on the financial services firm), or walk away and try their luck in court.
Improving dispute resolution
Consumer Action Law Centre senior policy analyst Cat Newton said AFCA represented a positive step for consumer complaint handling, and the one-stop shop model and increased monetary limits were both improvements on the old system.
“We’re very excited,” Ms Newton said.
“We think it’s very important that everyone can access a free, fair, and fast service to get justice when things go wrong.”
The Australian Banking Association (ABA), a lobby group representing a number of Australia’s banks, also welcomed the changes.
“Merging external dispute-resolution schemes from insurance, banking and superannuation into one organisation will ensure there is a consistency for the customer in decision making on their issues,” ABA chief executive Anna Bligh said.