The Australian Financial Complaints Authority (AFCA) has released its submission to the scheduled Independent Review of its first two years of operations.
The legislation that authorised AFCA’s establishment required an initial review of AFCA’s functions and performance and this review is being conducted by Treasury.
In its first two years of operation, AFCA has established itself as a highly effective external dispute resolution scheme for financial services, including the provision of systemic issues investigations and reporting and code monitoring administration services to the financial services sector.
Despite the significant impact of the COVID-19 pandemic, AFCA has continued to deliver services effectively during its second year of operation and has worked flexibly with scheme users to support them through this very challenging period. The submission highlights how AFCA has met its statutory objectives in its first two years of operation.
“We’re proud of everything that AFCA has achieved as a still young organisation,” Chief Ombudsman and CEO David Locke said in releasing the submission. “We have met the challenges of implementing a major financial reform and building a new scheme in just two years. But we also know there are opportunities in this next phase of our development to improve and enhance our service. Our submission provides our views on how that can happen.”
The establishment of AFCA was a significant reform of financial services complaints resolution in Australia. AFCA was set up as an independent, non-government body following the 2016 Ramsay Review, which looked at how Australia’s external dispute resolution framework could be improved.
On 1 November 2018, AFCA replaced the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT) as a one-stop shop for financial dispute resolution, with the service being free for complainants.
AFCA’s submission shows 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 it inherited from the predecessor schemes.
In addition, AFCA has established and administered a legacy jurisdiction covering historical complaints going back to 1 January 2008.
AFCA’s submission notes it has delivered access to justice to many thousands of Australians, achieving $477 million in compensation or refunds in its first two years.
In addition, AFCA’s systemic issues and serious contravention work led to a range of enforcement actions by regulators, resulting in more than $202 million in financial remediation for consumers and small businesses over the two-year period.
AFCA’s submission proposes several areas for further discussion and consultation.
“The Review provides an opportunity to consider appropriate enhancements to our Rules and jurisdiction, in the best interests of consumers and members, and the financial services sector more broadly,” Mr. Locke said. “There are several areas where we believe changes would be appropriate and further consultation welcome.”