Review of the Australian Financial Complaints Authority
The submission to the Department of Treasury in relation to its review of the Australian Financial Complaints Authority (AFCA) was prepared by the Law Council of Australia.
The Law Council supports AFCA as the primary means of resolving most financial services disputes, particularly low value claims, and believes that a properly funded AFCA has the potential to result in improved outcomes for consumers by reducing the time associated with resolving financial complaints.
This submission has regard to the Terms of Reference established by the Treasury and has been prepared with the view to contributing to the continuing improvement of AFCA. To this end, the Law Council has made the following recommendations:
- activities of debt and credit repairers should be subject to AFCA processes;
- AFCA’s referral powers and practices should be expanded, including clear authority to refer matters to a wider range of regulators such as the Legal Services Commissioner or equivalent in each jurisdiction;
- consideration should be given to a clearer distinction between compulsory membership and voluntary membership categories of activities subject to AFCA jurisdiction;
- an independent review of AFCA monetary limits, including for claims for indirect financial loss or non-financial loss and the amount which may be awarded, should be undertaken;
- consideration should be given to having an Independent Assessor with previous judicial (and for superannuation matters relevant trust law, equitable jurisdiction) expertise to regularly review the merits and substance of a representative sample of Preliminary Assessments and possibly even Determinations;
- clarification regarding the two-step decision making process is required to ensure a Determination is not treated as an appeal of a Recommendation;
- consideration should be given to a more rigorous internal review or peer review conducted before Preliminary Assessments are issued to promote consistency, timeliness and sound application of relevant legal principles and statutory rules to the particular case; and
- AFCA could do more to utilise and promote the power to ask the Financial Firm to contribute up to $5,000 towards the costs for obtaining expert evidence incurred by the complainant in non-superannuation complaints, particularly in circumstances where consumers are unaware of the importance of the evidence to their case.
You can read the full submission below.