The Bull

Tuesday 14

August, 2018 6:39 PM



Australian financial dispute body to welcome funding proposal opinions

Australian financial dispute body to welcome funding proposal opinions

A new financial dispute resolution body is set to launch in Australia, and it is looking for the public to weigh in on its funding proposal model before it goes live later this year.

Share |

25.07.2018 12:38 AM

A new financial dispute resolution body is set to launch in Australia, and it is looking for the public to weigh in on its funding proposal model before it goes live later this year.

The Australian Financial Complaints Authority (AFCA) is set to have the power to mediate over external financial disputes. Ahead of its inception, it wants to finalize its accepted powers and general activities.

The consultation process on the AFCA’s funding model will center around the provision of sufficient funding to carry out an effective transition when merging several external dispute resolution schemes into one ruling body.

To make this viable, the AFCA has announced a three-part funding approach, which entails the transition phase, the interim position and the long-term aim of being fully funded.

Aimed at industry leaders, stakeholders and associations as well as current and potential members of the AFCA, the consultation period runs up until this Friday, July 27.

The AFCA will replace various bodies, including the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal (SCT) and the Credits and Investments Ombudsman (CIO). All Australian financial companies must, by law, become members of the new body.

The transition phase of funding should be in place before November 2018 to allow for the AFCA’s swift ability to receive and handle complaints that come its way. It is set to cover all costs surrounding governance, including legal and financial aspects as well as those related to audits and compliance.

As well as this side of the setup, funding will also need to go toward establishment costs, which can include expenses for web development, training, project management and applications that deal with reporting complaints. The hope is that this will enable the AFCA to manage up to 1,000 complaints a week. According to a May 2018 announcement, central government budgets have already allocated $1.7m in funding.

Phase two involves an interim funding model covering the three years leading up to 2021. During this period, a so-called “hybrid” setup will begin, with some funding covered by existing arrangements for FOS and CIO members. Levies that currently apply from the Australian Prudential Regulation Authority (APRA) will also factor in.

This will allow for the establishment of an extended jurisdiction base, whereby the AFCA will have the reach, funding and full skill set to handle all necessary complaints without the need for referrals elsewhere.

The final stage – the full-funding model – aims to be in place by the start of the 2021 fiscal year so that it can roll out by July of that year. The full level of funding will undergo assessments on operational efficiencies as well as complaint forecasts for the coming years.

The three main components of this funding model will stem from a membership levy based on the size of each financial business, a user charge based on the number of registered complaints and a fee for each complaint based on the level of complexity and stage of remediation.

Financial services already registered with the FOS should notice the least difference, as the AFCA largely mirrors its fee structure. 

Archive
Markets
Index: Points Change Percent

PLEASE SUPPORT OUR SPONSORS, AUSTRALIA'S LEADING BROKERS:



© Copyright TheBull.com.au. All rights reserved.