The government is pressing ahead with a one-stop shop for financial complaints in the wake of damaging revelations during the banking royal commission.
The financial services minister, Kelly O’Dwyer, will confirm on Tuesday that a financial dispute resolution system first flagged by the Coalition in 2017 will now be authorised.
All Australian financial services licensees, Australian credit licensees, superannuation trustees and other financial firms required to become members of the Australian Financial Complaints Authority by law will need to do so by no later than 21 September
Afca will replace three existing schemes – the financial ombudsman service, the credit and investments ombudsman and the superannuation complaints tribunal
“For the first time ever, consumers will be able to go to one place to resolve any kind of financial complaint, and the new Afca scheme will operate under significantly higher monetary limits and compensation caps.
“The Turnbull government is delivering on our commitment to overhaul the external dispute resolution framework for financial disputes in Australia, providing consumers and small businesses with access to free, fast and binding dispute resolution.”
Afca was announced in the 2017 budget as a one-stop shop to resolve disputes and obtain binding outcomes from banks and other financial institutions. Compensation orders are capped at $500,000, almost double the limits before it was established. For small businesses lodging credit facility disputes, the maximum compensation rises to $1m.
The government’s move follows controversy over poor practices revealed at the banking royal commission. Counsel assisting the commission have suggested Australia’s largest wealth manager, AMP, could face criminal charges for lying to and misleading the regulator about charging customers for advice they never received.
The revelations of the fees-for-no-service scandal caused AMP’s chairwoman, Catherine Brenner, and general counsel, Brian Salter, to step down.
