The Australian Financial Complaints Authority (AFCA) has responded to confusion around the ability of new-to-industry brokers to write business following EDR changes.
Last week, the broking industry had flagged that new-to-industry brokers could be prevented from joining aggregators or becoming accredited with lenders as a result of a hiatus in the issuance of certificates of ASIC-approved external dispute resolution (EDR) body, following the consolidation of three EDR schemes.
Given the Australian Financial Complaints Authority (AFCA) is still consulting on the rules that would define its jurisdictional parameters as well as its future funding arrangements, the broking industry has been unclear as to how memberships work under the consolidated EDR scheme. AFCA is the amalgamation of the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal, and the Credit and Investments Ombudsman (CIO).
With CIO confirming that it would no longer be accepting any new members due to being in a transitional period, the industry expressed concern that new brokers would not be able to write loans or become an authorised credit representative until 3 September 2018, the date from which they will be issued with their AFCA membership certification.
Despite some brokers saying that they have been waiting for more than a week to receive the required certificate and that they have been in communication with AFCA about it, a spokesperson from the authority told The Adviser that once a membership application has been submitted via AFCA’s website, a confirmation email would “normally” be sent within three to five business days.
“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,” the spokesperson said.
The spokesperson added that membership certificates would be available online via AFCA’s membership portal, Secure Services.
Further, a new member will be also be provided instructions on how to navigate Secure Services in the confirmation email, according to the AFCA spokesperson.
While the CEO of Outsource Financial Tanya Sale lamented that the aggregator is not able to bring on new brokers until it has proof of EDR certification, the AFCA spokesperson claimed that the confirmation email “should be sufficient to meet their EDR scheme obligations”.
“Any other obligations that are required by ASIC for a new licensee or authorised credit representative before they operate their business should be checked with ASIC,” the spokesperson added.
Ms Sale claimed that new brokers looking to become credit representatives under Outsource that have applied for AFCA membership have been faced with this issue for at least two weeks.
“New brokers have put in all that time to get their qualifications and all the components that we require as an industry, so most likely have been preparing to become a broker for a few months already, and now they are going to just sit there twiddling their thumbs for the next few weeks,” the CEO told The Adviser last week.
“It would have a major impact on the broking industry because then you have a very high number of people who are missing out.”
[Related: New brokers ‘locked out’ under EDR confusion]