In 2016 the Federal Government commissioned a review of financial services external dispute resolution schemes.
The review recommended the establishment of the Australian Financial Complaints Authority (AFCA) to amalgamate:
- the Financial Ombudsman Service (FOS);
- the Credit and Investments Ombudsman (CIO); and
- the Superannuation Complaints Tribunal (SCT).
We think that the move to set up AFCA is a positive step that creates a one-stop-shop for financial complaints. It needs to be fully funded, have consumer involvement and comprehensive terms of reference.
What are the monetary caps for AFCA?
Like FOS and CIO, AFCA will have monetary caps, but they will be higher:
- $1 million for disputes-non-binding recommendations;
- $500,000 for compensation-binding determinations;
- $13,400 per month for income streams;
- $15,000 for uninsured third-party motor vehicle claims; and
- $250,000 for general insurance broker disputes.
Superannuation disputes at AFCA will not have any caps; the same as is currently applicable at the SCT.
What transition arrangements will be in place?
AFCA is due to start operating by 1 November 2018.
Until then, FOS, CIO and the SCT will continue to receive and deal with complaints.
After1 November this year, complaints with FOS and CIO will move over to AFCA.
Existing SCT complaints will continue to be dealt with by the Tribunal which will run them off until a date before 30 June 2021.
Options available to transfer superannuation complaints to AFCA before 2021
Some superannuation complaints may be able to be transferred from the SCT to AFCA prior to 30 June 2021.
Death benefit dispute will probably stay at the SCT, but some disability claims may be invited to transfer.
The details will be worked out in the coming months.
If you would like more information about AFCA or advice about your superannuation or insurance claims or financial advice disputes, contact today’s blog writer, John Berrill or call Berrill and Watson on (03) 9448 8048 or by email [email protected]