15 November 2018
The newly established Australian Financial Complaints Authority (AFCA) has announced today it will appoint a dedicated small business lead ombudsman to resolve financial disputes that small businesses have with their financial service providers.
“AFCA recognises that small businesses are a very important part of the Australian economy and the Banking Royal Commission has demonstrated how devastating it can be when they have financial disputes that are not fairly resolved. It is really important that AFCA understands small business and provides effective solutions to their disputes” said AFCA’s Independent Chair Helen Coonan ahead of the Sydney launch event today.
Under AFCA, a small business is now defined as an organisation with less than 100 employees (an increase from 20 employees). AFCA can consider complaints from small businesses about a credit facility up to the value of $5 million. Small businesses will also benefit from an increased compensation cap from $323,500 to $1 million, and primary producers have a compensation cap of $2 million.
“These are significant increases compared to previous schemes’ jurisdiction. This change means that AFCA is now able to consider complaints from over 98 per cent of small businesses. This covers the vast majority of small businesses in Australia and removes the need and expense of going to court to resolve financial disputes,” said AFCA’s Independent Chair Helen Coonan ahead of the Sydney launch event today.
“A dedicated small business ombudsman will ensure that we place the needs of small businesses front and centre in all our work, and that all our services are informed by a good understanding of the issues that Australian small businesses face,” Ms Coonan continued.
AFCA is a free service which provides consumers and small business an alternative to courts and tribunals to resolve their financial complaints.
“With the arrival of AFCA, and the increase in monetary limits, many small business complaints will now be covered by an external dispute resolution scheme for the very first time. This will be a big help and provides small businesses with a fair, free and independent way of resolving their disputes,” said David Locke, AFCA Chief Ombudsman and CEO.
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has commended the announcement from AFCA. “We welcome the announcement of a dedicated small business lead ombudsman,” Ms Carnell said. “We envisage a small business expert will be appointed, which will significantly improve small businesses’ access to justice and save them time and money.”
Commercial and Asset Finance Brokers Association of Australia President and Council of Small Business Organisations Australia Deputy Chair David Gandolfo also welcomed the news that AFCA will be appointing a dedicated lead small business ombudsman to deal with issues faced by Australian small business.
“These issues are often unique and require a special understanding of small business circumstances and the problems they sometimes face. Appointing a small business specialist to deal with these issues and interface with the financial service providers will provide a more efficient and understanding process,” said Mr Gandolfo.
“I also congratulate AFCA for listening to the concerns of small business during the transition phase to the new authority, and this appointment is a welcomed outcome” he continued.