The Australian Financial Complaints Authority has revealed its strategy, goals and vision, outlining that it will “seek to influence reform in the financial services sector”.
From 1 November 2018, the Australian Financial Complaints Authority (AFCA) will amalgamate three external dispute resolution (EDR) schemes: the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal and the Credit and Investments Ombudsman.
Ahead of its official launch on 1 November, AFCA has released its new strategy and brand, revealing that its purpose has been defined as providing “fair, independent and effective solutions for financial disputes”.
However, it outlined that its focus will not only be on resolving disputes in the financial arena, but mitigating them too, through innovative solutions, education programs and communication with all stakeholders.
Speaking to The Adviser, AFCA chief executive and chief ombudsman David Locke said: “We’re building on the work of the predecessor schemes, but it is a new organisation and our focus is really on ensuring we provide a world-class ombudsman service and really the best, most effective solution to resolve financial disputes.
“What will be different [from the previous EDRs] is that there will be much more of a focus on external engagement on working with brokers and [the] industry to use the intelligence that we have about how disputes arise and how to avoid disputes. So, I think we will be a lot more proactive in terms of putting information out there.”
Noting that a single EDR scheme will “simplify” the complaints procedure to small businesses and consumers alike, the chief ombudsman added that AFCA expects to handle 1,000 disputes a week (based on the previous EDR schemes’ volumes).
The chief ombudsman said: “With the [financial services] royal commission, nearly every second call from the public to us mentioned the royal commission, so we know that when matters are in the public domain then consumers are more likely to complain and raise issues.
“So, we’re expecting that, from day one, we will be getting about 1,000 disputes a week coming to us and we’ll be resourced to handle those sorts of volumes. But, of course, handling and resolving disputes is only one part of it. The more we can do to educate and to mitigate against disputes arising in the first place, the better.”
Shrinking, not growing, the business
Mr Locke added that his aim, therefore, was to “shrink the [complaints] business, not grow the business”.
He elaborated: “I think for brokers, and for [the] industry, we see ourselves as very much working with them to drive up standards and to assist and avoid disputes in the first place.
“I want us, as an organisation, to be working with small business, working with [the] industry, not just to resolve the issues that have arisen but also to educate and find ways to mitigate these sorts of problems. Because when they do arise, it is very challenging for brokers, as it is for consumers. So, actually finding ways to minimise this is the best course of action and our approach will be, very much, to work with both sides to get the quickest, easiest, best resolution.”
When asked by The Adviser about the frustrations and delays that some CIO members had been facing in regards to delays and costs of the merger, Mr Locke voiced sympathy with the issue, stating that “these sorts of mergers are never quite as smooth as you would like”.
“The CIO deed of transfer only became effective on 1 September this year, so the consequence of that was that we actually had to try and register thousands of people within a few weeks, and that did make it quite difficult.
“So, in an ideal world, we would have done that over a longer period, but we’re through that period now and we believe all those issues have been resolved.”
Noting that the corporate regulator has provided temporary “transition relief” for some credit representatives that have not yet obtained membership of the Australian Financial Complaints Authority, Mr Locke revealed that there were still approximately 800 CIO members who had not yet signed up.
“We don’t know how many of those 800 are still trading,” the chief ombudsman said, “so, we are looking at how we contact them and we’ve been working with ASIC as well in finding these remaining people.”
Mr Locke urged any brokers who had not yet joined AFCA to do so before the 1 November cut-off date, warning that any active brokers who have not joined by this date would be in breach of their financial [credit] licence conditions.
On publishing AFCA’s new strategy, AFCA’s independent chair, the Hon. Helen Coonan, said: “AFCA has a clear vision: to be a world-class ombudsman service, raising standards and minimising disputes, meeting community needs, and trusted by all.
“Our strategy reflects a new direction and vision for external dispute resolution for financial complaints in Australia.”
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.