From 1 November 2018, the Australian Financial Complaints Authority (AFCA) has been ready to receive complaints from consumers and small businesses. In its first year alone, the organisation is expecting to receive 55,000 complaints.
So, what is AFCA, what does it do and how do you submit complaints? Let’s investigate further.
What is the Australian Financial Complaints Authority?
The Australian Financial Complaints Authority, or AFCA, is the new Ombudsman responsible for providing fair, independent and effective solutions for financial disputes by working with consumers, small business and the financial services sector. It replaces the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).
It is hoped AFCA will help speed up the resolution of complaints, be able to handle far more disputes, be less confusing for consumers and significantly reduce the need for litigation.
According to AFCA, the scheme will be free for consumers as the single point of contact for financial complaints. Membership will be required under law or a licence condition for financial firms and advisers.
While AFCA replaces external dispute resolution schemes FOS, CIO and SCT, those old schemes will continue to handle any complaints received before 1 November 2018.
What types of complaints will AFCA deal with?
AFCA is responsible for overseeing a range of consumer and small business complaints regarding disputes with financial institutions in Australia. The types of complaints it deals with as part of its jurisdiction varies somewhat across different financial complaints.
The types of complaints AFCA oversees include:
- Superannuation: total and permanent disability (TPD) insurance decisions and difficulties or disagreements regarding the payment of death benefits.
- National Credit Code (NCC) facilities: financial hardship, unjust transactions or unconscionable interest and other charges under the NCC.
- Other: these include all other complaints such as unregulated loans.
It’s worth being aware of the time limits within which an AFCA complaint must be submitted, as they vary depending on the type of complaint and certain individual circumstances. To find out more about the time frames, visit AFCA. Bear in mind AFCA’s recommendation on its website that you contact your financial firm directly to attempt to resolve your issue before making a complaint with AFCA.
How can consumers make a complaint to AFCA?
If you have a complaint with your financial institution you can reach out to AFCA using an online form, from which the complaint will be registered and referred to the financial institution in question before being reviewed by an AFCA representative in the case where a resolution cannot be achieved between the institution and the complainant.
The Australian Securities and Investments Commission’s (ASIC) MoneySmart website suggests consumers should contact the financial institution first and make a formal complaint with them. From there, if you are not happy with the financial institution’s response or if they do not respond to your complaint within a reasonable time, that’s when you could consider lodging the complaint with AFCA.
What are the monetary limits for complaints made to AFCA?
According to AFCA, the service has higher monetary claim limits than were previously available through former external dispute resolution schemes such as the FOS. Depending on your circumstances and the sort of financial or credit product the complaint is about, claim limits up to $5 million and compensation up to $2 million are available to most complainants at the time of writing.
The following monetary limits and compensation caps that apply to claims for direct financial loss through AFCA in its current set of rules include:
- There is no monetary limit on the amount that may be awarded to the complainant in a superannuation complaint, although there are certain constraints on the sorts of remedies AFCA can provide.
- For claims against a general insurance broker, except where the claim only concerns its conduct in relation to a life insurance policy, the amount claimed must not exceed $1 million and the compensation limit is $250,000. Different compensation and claim limits apply to life insurance complaints depending on the terms and conditions of the policy.
- For complaints regarding small business loans, a credit facility must not exceed $5 million and the compensation limit is $1 million.
- If the business has a primary producer loan, the credit facility limit is the same as it would be with a small business loan ($5 million) but the compensation limit is $2 million.
- For claims arising from credit facilities provided to a person other than a small business or primary producer, the claim limit is $1 million and the compensation cap is $500,000.
AFCA has more information regarding its complaint handling process online.
Image Source: igorstevanovic (Shutterstock)
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