A new external dispute regulation (EDR) scheme has been backed by the Finance Brokers Association of Australia (FBAA), despite opposition from other industry associations.
The executive director of the FBAA, Peter White, has said that the new Australian Financial Complaints Authority (AFCA) would benefit consumers.
The formation of AFCA was informed by the Ramsay Review into the finance industry’s dispute resolution and complaints framework. The new EDR authority is an amalgamation of the Financial Ombudsman Service (FOS), the Credits and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).
Mr White said: “The amalgamation of the Financial Ombudsman Service, the CIO and the Superannuation Complaints Tribunal will improve systems that will lead to better consumer outcomes.
“We believe it will speed up turnaround times and streamline case management processes without the non-alignment of processes by two separate ombudsmen.”
His stance opposes that of the Mortgage and Finance Association of Australia (MFAA), which released a joint statement last week with five other associations (including the Customer Owned Banking Association (COBA) and the Australian Collectors & Debt Buyers Association (ACDBA)), saying that AFCA was a “monopoly scheme” which would “undermine the fabric of EDR.”
The group also argued that AFCA would be less accountable to stakeholders and less responsive to industry concerns, while also favouring big banks over smaller.
Speaking to these complaints, Mr White said the new authority would focus on better outcomes for consumer borrowers and small businesses rather than associations, as had always been the case.
He also dismissed fears that smaller banks would end up subsidising a scheme which accommodates bigger banks.
However, CIO head, Raj Venga, has also slammed the AFCA and echoed fears that it would monopolistic, while calling the Ramsay Review a “complete whitewash.” Earlier in the month, Mr Venga argued that both the review and the AFCA were a diversion to avoid a royal commission into the big banks.
Responding to the remarks, Mr White said there was no basis for a royal commission: “The CIO needs to remember the ombudsman service is about borrower disputes being resolved and not industry bodies,” he said.