AFCA has provided a submission to the inquiry into ‘Credit and financial services targeted at Australians at risk of hardship’ by the Senate Economics References Committee.
As the new independent external dispute resolution (EDR) scheme, AFCA plays a key role in ensuring that fair, independent and effective solutions are delivered to consumers with financial complaints and therefore welcomes the opportunity to provide a submission to this inquiry.
AFCA’s submission focused on the issues that alter the effectiveness of EDR as a mechanism for consumers and small businesses.
Currently, some people who use services examined by this enquiry are not eligible to have their complaints considered by AFCA.
AFCA supports certain reforms that would improve consumer protection, regardless of their eligibility to have complaints considered by AFCA. This includes support for:
- The passage of the proposed small amount credit contract and consumer lease legislation and ensuring that the standards required of firms in this sector are clear
- Measures to ensure that financial counselling services are funded adequately now and in future
- The establishment of a compensation scheme of last resort
The suggestions made by AFCA in our submission to support these reforms are:
- Consider introducing a standalone, enforceable obligation for financial firms to treat consumers fairly
- Establish a new framework to regulate debt management firms, including licensing requirements, to improve consumer protection and ensure EDR services are not adversely affected
- Develop a sustainable funding model to ensure that financial counselling serviced are adequately funded
- The inquiry considers whether consumers have access to EDR and possible reforms to increase EDR access
View the full report on our website at afca.org.au/about-afca/submissions/