2020–21 Annual Review

Submissions and consultations

AFCA proactively contributes to the development of reforms to financial services law, regulation and policy. Through this work, we aim to address issues raised in complaints or systemic issues, improve the resolution of complaints about financial services and reduce future complaints.

We participate regularly in inquiries, reviews and other consultations by making submissions, appearing at hearings and providing feedback on proposed reforms. We also work closely with regulators and peak bodies, sharing data and other information to improve practices.

In 2020–21, AFCA made written submissions, engaged with stakeholders and provided information and feedback on areas of reform and other matters including:

  • the review of the Privacy Act 1988 (Cth)
  • licensing and regulation of firms providing debt management services
  • changes to responsible lending obligations
  • regulation of debt agreement administrators
  • expansion of the consumer data right regime
  • changes to internal dispute resolution requirements in financial services through the new ASIC Regulatory Guide 271
  • ASIC’s review of the ePayments Code
  • the Royal Commission into National Natural Disaster Arrangements
  • the Draft Financial Planners & Advisers Code of Ethics 2019 Guide
  • ASIC consultation on updates to Regulatory Guide 256: Client Review and Consumer remediation.

Compensation Scheme of Last Resort

AFCA and its predecessor schemes have long advocated for the establishment of a Compensation Scheme of Last Resort (CSLR).

On 16 July 2021, the Federal Government released the exposure draft legislation to establish the CSLR.

The establishment of the CSLR will support ongoing confidence in the financial system’s dispute resolution framework, by facilitating the payment of compensation to eligible consumers who have received a determination for compensation from AFCA, which remains unpaid.

AFCA welcomed the announcement and reconfirmed its support for the creation of a CSLR following the Federal Government’s exposure draft legislation.

AFCA believes Australia needs a compensation scheme for people who have the right to a remedy for financial misconduct, but who are left without redress when a financial firm becomes insolvent.

AFCA looks forward to working with the government and stakeholders to help implement this important reform.

AFCA Independent Review

The Australian Financial Complaints Authority Act 2018 (Cth) (the AFCA Act) provided that an Independent Review (Review) be established after AFCA had been operating for 18 months (and five-yearly thereafter).

On Friday 19 February 2021, Senator Jane Hume, Minister for Superannuation, Financial Services and the Digital Economy announced the Review.

AFCA welcomed the Review and made a submission to Treasury on 26 March 2021. Additional information and data has also been provided by AFCA during the Review.

In our submission, AFCA showed that it experienced a very high uptake of its services in its first two years, receiving more than 153,000 complaints and finalising over 146,000 complaints in this period. Almost half of the complaints AFCA dealt with during this time were resolved in an average time of 31 days. The overall average time it took to finalise all complaints in the first two years was 74 days. AFCA has also resolved over 10,000 complaints that it inherited from predecessor schemes.

In addition, AFCA established and administered a legacy jurisdiction covering historical complaints going back to 1 January 2008.

AFCA’s submission proposed several areas for further discussion and consultation, including areas in which AFCA could make appropriate enhancements to its Rules and jurisdiction. Several areas that AFCA proposed, or has already progressed enhancements, include:

  • changes to our Rules to deal more effectively with fee-for-service representatives who lodge complaints
  • dealing with complaints without merit more quickly and at an earlier stage of our process
  • lifting our non-financial loss compensation cap, which is at a low level compared with other bodies.

In 2020–21 AFCA also commenced an internal review of our funding model to ensure it is cost-effective, fit-for-purpose and sustainable. Further work on the funding model review, including consultation with AFCA members and stakeholders, will be occurring in 2021–22.

You can find AFCA’s submission to the Independent Review at afca.org.au/submissions.

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