“It’s been a long time, a long time coming
But I know a change gonna come, oh yes it will”
— A Change is Gonna Come – Sam Cooke
The financial services industry is awash with ironies – Ministers who can’t manage their own finances (or company accounts) are given the Financial Services portfolio; Managers who miss significant compliance failures in the businesses they manage join Regulators and advisers, who have for so long called for the destruction of FOS, are forced to welcome it’s larger, more powerful replacement – AFCA.
The Australian Financial Complaints Authority (AFCA) is the new external dispute resolution scheme that replaces the Credit and Investments Ombudsman (CIO), the Financial Ombudsman Scheme (FOS) and the statutory Superannuation Complaints Tribunal (SCT).
AFCA will be a ‘one-stop shop” for consumer and business complaints against banks, licensees, advisers, brokers, Responsible Entities and Trustees.
While consumer associations are satisfied, it might distress some licensees to learn that AFCA has significantly higher monetary and compensation limits than either FOS or CIO.
What this means for you
If you are an AFSL you must become a member of AFCA by 21 September 2018. But remember you also need to maintain your FOS or CIO membership until you’re told otherwise.
ASIC will be monitoring transition arrangements consistent with Consultation Paper 298 “Oversight of the Australian Financial Complaints Authority: Update to RG 139”
In their Media Release 18-158MR dated 31 May 2018, ASIC confirmed that they will provide transition relief to financial services firms to provide them adequate time to update their disclosure documents.
Licensees have until 1 July 2019 to update their Financial Services Guides, Statements of Advice and other Disclosure documents with the contact details of the Australian Financial Complaints Authority.
ASIC recommend that, if you intend to rely on the relief, you review both the legislative instruments (2018/447 and 2018/448) and Regulatory Guide 165 “Licensing: Internal and external dispute resolution”.
Download RG165 (May 2018)
In reality, you’ll need to start directing complainants to AFCA from 21 September 2018 so it makes more sense to update your documents before, or on, 1 November 2018.
We’d suggest that you lock in this date if you can’t comply by 21 September 2018.
We’d also recommend that you review your IDR correspondence to ensure that consumers are informed that, if they are not satisfied by your response to their complaint, they can refer it to AFCA.
For more information on AFCA please read: