On 24 January the Australian Financial Complaints Authority (AFCA) appeared at the Senate Inquiry into credit and financial services targeted at Australians at risk of financial hardship. AFCA is the single Ombudsman scheme for financial complaints.
In November 2018 we provided a submission to the Senate Economics References Committee outlining AFCA’s position on the matter. You can read the full submission here.
AFCA plays a key role in ensuring that fair, independent and effective solutions are delivered to consumers with financial complaints and therefore welcomed the opportunity to provide a submission to this inquiry.
The Australian financial services regulation currently lacks an overarching focus on fair treatment of customers. We suggest that consideration be given to the introduction of a standalone enforceable standard requiring financial firms to treat consumers fairly.
Our submission to the Committee further details the benefits of using the UK-based Financial Conduct Authority’s Principles for Businesses as a model for reforms imposing the standard.
In its 2016-17 review of external dispute resolution framework, the Ramsay Review noted that there was no uniform regulatory framework applying to the activities of debt management firms in Australia. AFCA supports the views expressed in the Ramsay Review that debt management should be required to be members of AFCA.
“If debt management firms were required to be members of AFCA, consumers who might have complaints against these firms would be given access to free and timely dispute resolution,” said AFCA CEO and Chief Ombudsman David Locke.
Access to an Ombudsman scheme like AFCA is often easier for people who are financially literate and are connected to services and information through the internet. “Vulnerable and disadvantaged consumers often have difficulties seeking assistance from an Ombudsman scheme,” said Mr. Locke.
“Free financial counselling and other community services play a very important role in the financial sector. Without these services, it is likely that many people would not know that they can turn to a free service like AFCA for help,” continued Mr. Locke. “Given the important role financial counsellors play in the financial sector generally, we recommend that the Government, industry and the community sector work together to develop a sustainable funding model for financial counselling services.”
AFCA also supports other reforms that would improve consumer protection, regardless of their eligibility to have complaints considered by AFCA. This includes support for:
- the passage of the proposed small amount credit contract and consumer lease legislation and ensuring that the standards required of firms in this sector are clear
- the establishment of a compensation scheme of last resort.
We await the findings of the Senate Economics References Committee.
Published: 25 January 2019
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The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes. It is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation. Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.