Co-operation with AFCA Now Compulsory for all Members

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ACL and AFSL holders are now required to co-operate with the Australian Financial Complaints Authority (“AFCA”) in the resolution of disputes.

What are your new Obligations?

According to Section 11A of the Explanatory Statement and under Corporations Regulation 7.6.03C, financial firms that are members of AFCA must:

  1. Take reasonable steps to cooperate with AFCA to resolve any complaint;
  2. Give reasonable assistance to AFCA and identify, locate and provide documents to AFCA to resolve complaints; and
  3. Give effect to any determination made by AFCA in relation to the complaint.

AFCA’s CEO and Chief Ombudsman David Locke said AFCA expects all financial firms to cooperate fully and respond promptly and comprehensively to all requests. Similar regulations have been inserted into the National Consumer Credit Protection Regulations 2010 to ensure credit licensees are subject to the same obligations.

ACL and AFSL holders need to ensure they have robust record keeping processes in place to ensure all relevant documentation in relation to complaints can be easily and quickly located in order to comply with the new regulations. Licensees should also consider their internal processes in dealing with AFCA complaints, including clearly defined responsibilities in relation to:

  • Checking AFCA’s online secure services portal for any new complaints; and
  • Reviewing and responding to correspondence received from AFCA in relation to current complaints.

Background Information

Since 1 November 2018, AFCA has been the single point of contact for external complainants and has replaced the three previous EDR schemes:

  • the Financial Ombudsman Service (“FOS”);
  • the Credit and Investments Ombudsman (“CIO”) and
  • the Superannuation Complaints Tribunal (“SCT”).

Financial firms have relief from disclosure until 1 July 2019 during the period of transition to AFCA. However, from 1 July 2019 onwards, financial firms will need to refer to AFCA as the relevant external dispute resolution scheme in all of their disclosure documents, periodic statements and exit statements. This relief doesn’t apply to acknowledgements of complaints or final responses to complaints sent by licensees to complainants as part of their internal dispute resolution process.

From 1 February 2019, final responses to complaints should include only AFCA’s contact details to ensure complainants are aware that they have the right to progress their complaint with AFCA.

If you are not an AFCA member yet, you can apply for AFCA membership on the AFCA website.

Further Reading

Should you have any questions in relation to how the compulsory cooperation requirement may affect your current financial service business or your future AFSL/ACL application, please contact us.

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