The corporate regulator has approved the rules underpinning the Australian Financial Complaints Authority’s processes, which contain guidelines regarding the manner in which credit complaints will be handled by the new dispute resolutions body.
The Australian Securities and Investments Commission (ASIC) has announced that it has approved the Australian Financial Complaints Authority’s Complaint Resolution Scheme Rules and the Terms of Reference of AFCA’s independent assessor (IA).
The rules contain guidelines surrounding AFCA’s:
The AFCA rules note the complaints to which the National Credit Code apply where a complaint relates to a variation of a credit contract as a result of financial hardship, an unjust transaction or unconscionable interest, and other charges under the National Credit Code.
The rules also state that AFCA will not handle a complaint where the National Credit Code applies if it was submitted to AFCA before the later of the following time limits:
Further, the rules state that exclusions applying specifically to credit complaints include:
Following the announcement of the regulator’s approvals of the AFCA rules, ASIC deputy chair Peter Kell said: “ASIC’s approval marks another milestone towards the AFCA scheme’s commencement on 1 November 2018.
“The approval of the AFCA rules and the IA Terms of Reference follow a period of public consultation and feedback, and both AFCA and ASIC appreciate the timely contributions from industry and consumer representatives to that process. Further material changes to the AFCA scheme will also need to be approved by ASIC.”
AFCA chair Helen Coonan welcomed ASIC’s approval, adding: “AFCA will provide consumers and small business with access to fair, free and independent complaint resolution.
“We look forward to working with ASIC and consumer, small business and industry stakeholders in implementing this important reform, which will assist in restoring trust and confidence in the financial services industry.”
ASIC has also reiterated that it is a “statutory requirement that financial firms, including most credit representatives that deal with retail clients, must join the AFCA scheme by 21 September 2018”.
ASIC added that “almost all Financial Ombudsman Scheme members have effectively transferred their membership to AFCA”, and stated that “about 80 per cent of members of the Credit and Investments Ombudsman Scheme and 64 per cent of superannuation trustees and retirement savings accounts providers have also joined”.
However, concerns have been raised about the transference of memberships to AFCA, with several members of the finance and mortgage industry claiming that the transition will result in some EDR [external dispute resolution] members being “double-charged”, which could cost the industry millions of dollars.
For EDR licence holders whose membership expires prior to AFCA’s commencement date, they will be obliged to pay a full annual membership on top of their new AFCA membership fee.
Further, members of the mortgage and finance industry, including aggregator heads, have voiced frustration and disappointment that some new brokers could be prevented from writing business until AFCA commences operation.
However, in response to such concerns, an AFCA spokesperson told The Adviser: “After the membership application is accepted and payment is successfully received, we will provide the nominated primary contact for the membership a confirmation email of approved membership.”
[Related: AFCA responds to EDR membership concerns]
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