The Government has released exposure draft legislation to give effect to the Ramsay Review recommendation to overhaul the financial system's external dispute resolution (EDR) and complaints framework.
As part of the 2017–2018 Budget, the Government announced that it would create a new one-stop shop for financial disputes – the Australian Financial Complaints Authority (AFCA) – to be established by 1 July 2018.
AFCA will replace the existing framework of the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT). These existing bodies will continue to operate after 1 July 2018 to work through their existing complaints. Financial firms will be required to be members of AFCA, and its decisions will be binding on all firms.
The Government has also released a consultation paper on a range of other EDR matters. For example, whether the compensation caps for certain financial products, such as mortgages and general insurance products, should move immediately to $1 million upon commencement of the new one-stop shop. Superannuation disputes will not be subject to a monetary limit, but a $1 million compensation cap will apply for non-superannuation consumer disputes and small business disputes. The Government is also seeking feedback on the implications of removing the requirement for credit representatives to be members of the new one-stop shop.