From 1 November 2018 (changed from the initial start date of 1 July 2018), AFCA will start accepting consumer complaints for all financial services and superannuation complaints. The new EDR framework will give consumers access to a single external dispute resolution scheme to resolve all disputes about financial products and services.
AFCA will replace three existing schemes, the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal.
ASIC will have oversight of AFCA and the approval of external dispute resolution schemes and it is anticipated that ASIC will release regulatory guides with respect to its oversight of AFCA closer to the effective date.
For Financial Services Licensees and provider, all memberships with an external dispute resolution scheme must be maintained in accordance with current obligations during the transition period until the effective commencement date of 1 November 2018.
Under the new EDR framework, new monetary limits and compensation caps will be introduced to give consumers and small businesses access to a free and independent complaints regime:
- a monetary limit of $1 million and a compensation cap of $500,000 for most non superannuation disputes.
- unlimited monetary jurisdiction for superannuation disputes.
- no monetary limits and compensation caps for disputes concerning whether a guarantee should be set aside where it has been supported by a mortgage or other security over the guarantor’s primary place of residence.
- a monetary limit of $5 million and a compensation cap of $1 million for small business credit facility disputes.
Under the new AFCA regime:
- the single scheme will resolve all disputes about products and services provided by all financial service providers.
- information that was previously held by different EDR schemes, depending on the type of complaint and type of financial products, will be accessible by ACFA under a single scheme.
- financial service providers must participate in the enhanced internal dispute resolution framework to report their IDR activities to ASIC.
- ASIC will be provided with additional powers to determine the content and form of IDR reporting by financial service providers and to publish relevant data as necessary.
Meridian Lawyers can assist you to understand the scope of ACFA’s proposed activities and how it may impact your financial services business. Please contact our Financial Services team.
Disclaimer: This information is current as of April 2018. This article does not constitute legal advice and does not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of this article.