What is AFCA?
The Australian Financial Complaints Authority or ‘AFCA’ is a new external dispute resolution (EDR) scheme to deal with complaints from consumers involving financial services and products. It will be operated by a not-for-profit company limited by guarantee authorised by the Minister for Revenue and Financial Services (Minister).
AFCA replaces the three existing EDR schemes of the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and Superannuation Complaints Tribunal (SCT) so that consumers have access to a single EDR scheme.
Membership of the company will be required under law or a licence condition of a financial firm. AFCA operations will be financed by contributions made by its members. The scheme will be free to consumers.
- be the single point of contact for complainants for EDR services;
- have higher monetary limits;
- be more accountable to users, including by having an independent assessor to deal with complaints about its handling of disputes; and
- have rules (terms of reference) to support its dispute resolution functions and legislation in the case of superannuation disputes.
Who is on the new AFCA Board?
The Minister for Revenue and Financial Services has appointed Helen Coonan as the inaugural AFCA chair. The other Board Members are listed below.
When is AFCA expected to commence?
AFCA will be ready to receive and handle complaints from 1 November 2018.
When will full contact details for AFCA be available?
- The AFCA website is www.afca.org.au. The website will be regularly updated ahead of 1 November with information for consumers, small business and financial firms.
- The AFCA address is GPO Box 3, Melbourne, VIC 3001
- The AFCA phone number is 1800 931 678
What is FOS's role in the transition to AFCA?
In order to facilitate the transition of FOS to AFCA, the membership base, employees and assets and liabilities of FOS were transitioned to the new operating entity for AFCA (AFCA Ltd).
AFCA Ltd is now managing and operating the FOS scheme, and any existing disputes and matters with FOS will continue to be dealt with under the FOS Terms of Reference until they are resolved.
AFCA will oversee the establishment and implementation of the new AFCA scheme to operate from 1 November 2018.
Why is the transition being handled this way?
This process allows for FOS, as the largest EDR scheme, to transition to AFCA first so that its resources and membership base can form the foundation for the new AFCA scheme. This will ensure a smooth and orderly transition of the existing EDR schemes to AFCA.
FOS has consulted with the Treasury Transition Team and other relevant stakeholders including the Superannuation Complaints Tribunal, to consider the most appropriate approach to establish the AFCA scheme. The aim is to ensure a smooth and efficient transition process for all stakeholders.
What is my role in the transition process?
As part of the transition of FOS to AFCA, the FOS scheme will be operated by AFCA until the new AFCA scheme commences from 1 November 2018. You would have been contacted by email to complete your Annual Membership Assessment Form for the 2018/2019 period, including a declaration to become a member of AFCA.
If you completed the annual assessment form, you do not need to do anything else to transition your membership.
If you have not completed your annual assessment, you will not be a member of AFCA.
How will the transition process affect me?
Most current members of FOS have already completed the annual assessment and member declaration to ensure a smooth transition to AFCA.
The only difference now is that you will be a member of a different operating entity AFCA with a slightly different constitution.
Upon formal commencement of the new AFCA scheme on 1 November 2018, there is nothing further that you will need to do to be part of the new AFCA scheme. Any existing unresolved matters under the FOS scheme at that time will continue to be handled under the FOS Terms of Reference by AFCA until they are resolved.
How will I be kept up to date?
Regular updates will be provided to members by email and through the new AFCA website and other communications.
What is the transitional plan for superannuation trustees?
The AFCA Board will work with the SCT and Industry bodies to help the industry understand any changes. This will include the process for becoming a member of AFCA, changes required for handling of disputes after the AFCA commencement date and dealing with transitional issues as the SCT is wound down.
Superannuation entities are invited to apply for AFCA membership online from 6 August to 21 September 2018.
When will the membership renewal invoices be issued and what period does this cover?
Invoices for AFCA membership for current AFCA members who transferred from FOS were issued in late June, covering membership from 1 July 2018 to 30 June 2019.
Will there be two lots of invoices to be paid as a FOS and AFCA member?
No. One invoice will be issued for 2018/19, covering membership under the AFCA transition.
What will happen to open disputes with FOS on 1 November 2018 when AFCA commences?
These disputes will remain under FOS's Terms of Reference (ToR), and will continue to be handled in accordance with those ToR.
What will be the dispute fee be for disputes received prior to 1 Nov 2018 but not closed by 31 October 2018?
The current FOS dispute fee structure will be in place and will continue to apply to these disputes, subject to any annual CPI related increases that normally occur on 1 July each year.
As a Licence holder, do I have any other EDR scheme that I can join aside from AFCA?
No. In accordance with the legislative changes and government policy, AFCA, once established, will be the single EDR scheme for the financial services industry.
When will the new Terms of Reference (Rules) for AFCA be released?
AFCA will be required to have Rules governing its jurisdiction and processes. AFCA consulted on its draft Rules in June 2018.
The proposed Rules have been drafted in accordance with legislative requirements, and ministerial and regulatory guidance. The Rules will be finalised and approved by ASIC by September 2018.
Can I still access the old FOS website?
Yes you can. At this stage, the existing FOS website will be active until approximately 2020.
I am a new licensee. How do I join AFCA?
New licensees who are currently not a member of a financial services dispute resolution scheme will be able to apply for membership from mid-May 2018. Visit the AFCA website for more information.
Will there be a change in the dispute resolution process and response times for members?
Members will be advised if there are any changes to process and response times, once stakeholder consultation has been completed over the next few months.
Will I still be able to access Secure Services?
Yes, both the FOS and AFCA websites will contain links to Secure Services.
How long will we have to update EDR scheme details in the relevant documentation?
AFCA members need to ensure their customers are aware that they can bring a complaint to AFCA in accordance with ASIC Regulatory Guide 165. By 1 July 2019, members must alsso include AFCA's contact details in their Financial Services Guide or Credit Guide and in other relevant disclosure documentation.
There is a page on the AFCA website offering guidance to financial firms on how to update their documents and EDR referral information with AFCA's contact details.
Recent ASIC announcements about AFCA:
ASIC has announced the following information relevant to AFCA and financial firms:
- ASIC has released Regulatory Guide 267, a guide for its oversight of AFCA. RG 267 replaces RG 139 and outlines mandatory requirements that AFCA is required to comply with. RG 267 also outlines ASIC’s powers to issue regulatory requirements, give directions and approve material changes to AFCA's Rules and other scheme governance arrangements.
- RG 267 sets out how ASIC will administer AFCA's reporting requirements to ASIC, including AFCA's obligation to refer particular matters including systemic issues and serious contraventions to ASIC. No material changes can be made to the scheme without the approval of ASIC.
- ASIC will give financial firms, including superannuation trustees, transitional relief until 1 July 2019 to allow them time to update mandatory disclosure documents and periodic statements with AFCA's contact details. Financial firms can access ASIC’s updated RG165, media release and other documents from the ASIC website.
- ASIC has welcomed the authorisation of AFCA and provided information for firms and consumers here.
- ASIC will also publicly consult on new internal dispute resolution (IDR) and mandatory reporting requirements that are also contained in the AFCA legislation – but this consultation will not take place until after AFCA commencement.
What’s happening with Code?
The Code Compliance and Monitoring team and its function has also been transitioned to AFCA. AFCA will be administering the Code compliance functions as per the arrangements that FOS had in place prior to 1 May 2018.
What are the key dates with respect to the establishment of AFCA?
The key dates are: