Important information about transition
The Bill to establish the Australian Financial Complaints Authority (AFCA) was passed in Parliament in February 2018. AFCA will replace the Credit and Investments Ombudsman (CIO), Financial Ombudsman Service (FOS) and Superannuation Complaints Tribunal (SCT).
The Minister for Financial Services, Hon Kelly O’Dwyer MP stated that AFCA would be operational no later than 1 November 2018 via media release. Following AFCA's authorisation, the Minister will appoint the Hon Helen Coonan as the inaugural Chair of AFCA as well as the remaining minority directors.
CIO is actively participating in the transition process and has engaged with ASIC, FOS and the Treasury transition team to ensure the smooth transition to AFCA and to secure the transition of CIO members and staff to AFCA.
The Australian Securities and Investments Commission (ASIC) has issued a media release reminding licensees and credit representatives of their obligation to comply with their external dispute resolution (EDR) requirements despite the establishment of AFCA. ASIC will work with Government and scheme stakeholders to ensure a seamless transition to the commencement of AFCA. In the interim, ASIC will retain direct oversight of the two ASIC-approved schemes – CIO and FOS. (Separate arrangements are in place for the ongoing operation of the SCT to enable it to deal with existing complaints.)
Broader jurisdiction, new monetary limits, and compensation caps
AFCA will apply a new definition for small business (any business with fewer than 100 staff), extending the current jurisdictional limits of EDR.
AFCA will have the following monetary limits and compensation caps:
A memorandum of understanding between CIO and FOS will prevent members moving between the schemes in the transition period. (The only exception is where a credit representative requires membership from the other scheme because its new licensee is a member of that other scheme.)
In the interim, ASIC will retain direct oversight of the two ASIC-approved schemes – CIO and FOS. (Separate arrangements are in place for the ongoing operation of the SCT to enable it to deal with existing complaints.)
We will keep you updated with the transition in due course. If you have any queries, please email us.