The new Australian Financial Complaints Authority (AFCA) user-pays funding model will be introduced from 1 July after being approved by the AFCA board.
This would see the vast majority of firms pay the same or less in fees while the 10% of ‘heavy impact’ firms would see fees that fairly reflect that fact.
Overall, 95% of licensed financial firm members of the AFCA external dispute resolution scheme would only pay their annual registration fee, which had been set at $375.55 for the coming financial year.
AFCA chief ombudsman and chief executive, David Locke, said: “Members welcomed the fact the model rewards good complaints resolution performance, and that it apportions fees fairly based on use of AFCA’s services.
“The feedback we received was overwhelmingly positive. This is a fair, transparent and equitable funding model. Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”
The association’s consultation into the model included 60 meetings with peak bodies and members who were most likely to see an impact, five webinars for all members and 11,000 tailored impact assessments sent to firms.
Feedback from firms saw instalments introduced for member payments above a threshold amount, no fee would be payable for complaints found outside of AFCA’s jurisdiction and the five annual free complaints would be excluded when AFCA calculated the user charge for frequent users of the service. There would also be a single registration fee and simplified complaint fee structure.
The superannuation levy has been abolished and super funds have been brought under the same fee structure as other scheme members.
Comments
Ok David "fair, transparent and equitable funding" lets not get too excited. Fair and AFCA should not be said in the same sentence - however credit where credit is due; AFCA have been forced to improve after a loss in Fed Court and submissions from members slamming AFCA in the Gov review (even though you still patted yourself on the back). You say you will knock out vexatious complaints early - lets see, you have never done it in 10 years of dealing with FOS/AFCA so show me the money David! Your business model is made on a funding conflict - the more complaints, the more money you get paid. So, 5 free complaints is heading in the right direction, no fee for complaints outside AFCA jurisdiction is a mistake you are correcting.
The true AFCA cost to advisers is many multiples of the AFCA fees. Adviser costs are inflated by all the extra administrative and compliance processes needed to defend against vexatious complaints and biased AFCA findings. Costs are also inflated by the higher PI premiums associated with AFCA bias risks.
AFCA should not have jurisdiction over financial advisers at all, now that we have the so called "single disciplinary body"
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