The Federal Government is on track to establish a new external dispute resolution framework aimed at empowering consumers and small business in the financial sector. The centrepiece of this framework is the formation of a new ‘one-stop shop’ for disputes – the Australian Financial Complains Authority (AFCA).
AFCA will replace the current suite of external dispute resolution services, comprising of the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal, drawing all relevant expertise under one roof.
AFCA will commence operations with:
- unlimited monetary jurisdiction for superannuation disputes;
- a $1 million limit on the size of non-superannuation consumer disputes (a 100% increase on the current limit);
- a minimum $500,000 compensation cap for non-superannuation consumer disputes (a 62% increase on the current cap);
- $5 million small business credit facility limit (a 250% increase on the current limit);
- $1 million compensation cap for small business disputes (a 224% increase on the current cap); and
- no monetary limits or compensation caps for disputes relating to guarantees supported by a mortgage or other security over the guarantor’s primary place of residence.
AFCA aims to “provide access to free, fast and binding dispute resolution”. There will be no cost to consumers in bringing a complaint to AFCA. Financial firms will be required to be members of AFCA, with AFCA decisions to be binding on all firms.
For more information, please contact ERA Legal.