A new financial services dispute resolution one-stop shop was launched today, pledging to take a lead in raising industry standards as it responds to disputes and works with regulators to prevent misconduct.
Chairman Helen Coonan says the Australian Financial Complaints Authority (AFCA) will play an important role in restoring trust in financial institutions in the wake of the Hayne royal commission.
“We will influence reform in the financial services sector by raising standards and improving internal practices to reduce and resolve disputes,” she said.
AFCA has a broader reach than the Financial Ombudsman Service (FOS) that has previously provided resolution for insurance matters. The new service has a $1 million limit for disputes, up from $500,000 previously, while the compensation cap rises to $500,000 from $325,000.
The Credit and Investments Ombudsman and the Superannuation Complaints Tribunal have also been rolled into the new organisation.
CEO and Chief Ombudsman David Locke says AFCA will also work more closely with the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority and the Australian Tax Office on systemic misconduct issues.
“What the royal commission has demonstrated in graphic terms is the need for such an organisation as ourselves,” he told ABC radio today.
“We want to be an independent service that commands trust and confidence from the public as well as from financial institutions.”
AFCA will aim to resolve the vast majority of disputes within 90 days, he says.
“If matters are incredibly complicated, have a long history, have multiple issues, it may be longer than that, but certainly the timelines that some of the issues in the past have taken just won’t cut it,” Mr Locke said.
Insurance Council of Australia CEO Rob Whelan says the group’s 52 member companies have been preparing for the new dispute resolution service for almost a year and have changed systems, forms and advisory information and briefed staff.
The new service “should be a win for consumers and small businesses that experience financial sector disputes”, he said.
AFCA has also taken over the FOS role in supporting the independent committees that monitor compliance for the general insurance code of practice and the insurance brokers code of practice.
Assistant Treasurer Stuart Robert said the “one-stop shop” represented a new era for financial despite resolution, delivering free, fast and binding services for complaints.
“Consumers and small businesses will benefit from having increased access to redress,” he said in a joint statement with Treasurer Josh Frydenberg.
AFCA says it has more than 37,000 members, who were required to transfer from the previous organisations, and the potential to deal with more than 55,000 complaints in its first 12 months.