AFCA report calls for better transparency and more staff capability reviews

By Melissa Coade

Monday November 29, 2021

Jane Hume
Jane Hume is minister for superannuation, financial services and the digital economy. (AAP Image/Mick Tsikas)

A review into the Australian Financial Complaints Authority (AFCA) by a unit from within Treasury has made 14 recommendations, including calls to regularly assess staff capabilities moving forward. 

The review report was tabled in parliament last week and found that AFCA was operating effectively and meeting its statutory requirements ‘in a difficult operating environment and a changing regulatory landscape’, referring to the impact of the COVID-19 pandemic and the fact that complaint volumes were higher than initially expected.

To improve staff-retention rates, the report also suggested AFCA implement consistent reviews of workforce capability.

While this [report] is an endorsement of its performance in its establishment phase, AFCA will need to continue to develop and improve its processes as it consolidates its place in the financial system,” the report read.

“The review is satisfied that AFCA currently has several strategies in place to develop and retain its staff but notes that regular reviews of staff capabilities are important going forward,” the review later noted.

Included among the report’s 14 recommendations are calls to improve the body’s decision-making processes, as well as transparency for parties named in a complaint. Another recommended change to authorisation conditions would permit the body to block poorly performing paid advocates from participating in its complaints process.

“AFCA should address poor conduct by paid advocates affecting the efficiency of the scheme, such as by amending its rules to allow it to exclude certain paid advocates from involvement in the complaints process,” the report said. 

“The government could also consider an amendment to AFCA’s authorisation conditions to support such changes.”

The AFCA is a non-government, not-for-profit ombud service that was established in 2018 and amalgamated the functions of predecessor schemes – the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).

The authority provides free and independent help with financial disputes. It has been designed as a ‘one-stop-shop’ for individuals and small businesses to raise disputes with their financial service provider, over banking, credit, insurance, advice, investments or superannuation.

Minister for superannuation, financial services and the digital economy Jane Hume issued a statement on Wednesday saying the federal government was committed to ensuring AFCA was operating effectively and achieving its objectives.

“AFCA plays an important role in the financial system, providing consumers and small businesses that have complaints about their financial firms with access to an out-of-court dispute resolution service that is designed to be free, fast and binding,” Hume said. 

The minister said only one of the 14 review recommendations was targeted at the government — to remove the legislative requirement for authorised credit representatives to be members of AFCA.

“The government supports the implementation of this recommendation noting it removes unnecessary regulatory requirements that do not enhance protections for consumers,” Hume said.

As part of its review, Treasury received submissions from current and former complainants, financial firms, consumer advocacy organisations and industry bodies. The review unit also analysed data on AFCA’s operations to produce the report. 

AFCA has the power to issue binding decisions on financial firms under the Corporations Act in the event that an agreement between parties cannot be reached.

The review concluded that AFCA’s decision-making was fair, independent and efficient overall but highlighted the need for caution in the application of its fairness jurisdiction. It also said there was room to improve the timeliness of its dispute resolution service for complaints yet to be settled 12 months after having been made. 

“The review considers that in exercising its fairness jurisdiction when making decisions, AFCA should have primary regard to the four factors identified in its rules – legal principles, industry codes, good industry practice and previous determinations,” the report said.

“The review identified some shortcomings in the timeliness of AFCA’s resolution of complaints and recommends AFCA better manage users’ expectations around timeframes, as well as focusing on improving the timeliness of complaints that remain unresolved beyond 12 months.”


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