The Australian Financial Complaints Authority or ‘AFCA’ is the new external dispute resolution (EDR) Authority to deal with complaints from consumers in the financial system. It is operated by a not-for-profit company limited by guarantee that has been authorised by the Minister for Revenue and Financial Services (Minister).
AFCA replaces the three existing EDR schemes of the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT) so that consumers have access to a single EDR framework.
Membership of AFCA will be required under law or a licence condition. AFCA operations will be financed by contributions made by its members. The scheme will be free to consumers.
· be the single point of contact for complainants for EDR services;
· have higher monetary limits;
· be more accountable to users, including by having an independent assessor to deal with complaints about its handling of disputes; and
· have rules ( terms of reference) to support its dispute resolution functions and legislation, in the case of superannuation disputes.
AFCA will be ready to receive and handle complaints from 1 November 2018.
The AFCA Board will continue working with the CIO Board on the necessary arrangements for a transfer of its members and operations to AFCA.
CIO members who currently hold an Australian credit licence (ACL), an Australian financial services (AFS) licence or who are appointed as a credit representative are required to retain and renew their existing CIO membership until further notice. Members must continue to pay applicable membership fees when they fall due.
A new company called Australian Financial Complaints Limited (AFCL) will be the operating entity for AFCA. AFCL is a not-for-profit company limited by guarantee and will be funded by member contributions.
AFCL will ultimately be renamed Australian Financial Complaints Authority (AFCA) and oversee the establishment and implementation of the new AFCA scheme to operate from 1 November 2018.
In order to facilitate the transition of FOS to AFCA, the membership base, employees and assets and liabilities of FOS were transitioned to AFCL on 1 May 2018 (Transition Date).
This process has allowed FOS, as the largest EDR scheme, to transition to AFCL first so that its resources and membership base can form the foundation for the new AFCA scheme, with appropriate transition arrangements for CIO to be subsequently implemented, prior to 1 November 2018. This will ensure a smooth and orderly transition of the existing EDR schemes to AFCA.
The need to provide EDR scheme details in the relevant documentation is outlined in ASIC RG139. ASIC recently consulted on a review of RG139, during which disclosure relief for EDR scheme details was a consideration and open for discussion. Consultation on RG139 has now ended. ASIC has recently advised that it will be announcing its position in relation to disclosure relief soon. You can view ASIC’s media release