AFCA dismissed as politically-motivated ‘juggernaut Frankenstein’
The Federal Government has been warned that its creation of the Australian Financial Complaints Authority (AFCA) is tantamount to having created a “regulatory Frankenstein” and is really just a political move aimed at avoiding a Royal Commission.
The Association of Securities and Derivatives Advisers of Australia (ASDAA) submission to the Senate Economics References Committee review of the AFCA legislation described the new one-stop-shop financial services external dispute resolution body as “a juggernaut Frankenstein-like aggressive consumer advocate granted with massive judicial-like powers without sufficient oversight”.
“As we stated in previous submissions, ASDAA is very disappointed the Ramsay Review has given ZERO consideration in both of their interim and final reports on how to help reduce EDR [external dispute resolution] red tape and lower the EDR cost to the FSP’s (Financial Service Providers),” it said.
The submission said everything presently on the table represented increased red tape and would put significant upside pressure on higher EDR membership and dispute fees to FSP’s.
“Furthermore, it is just mind boggling that the Ramsay Review failed to conduct any sort of cost benefit analysis in replacing CIO [Credit Investment Ombudsman], FOS [Financial Ombudsman Service] and the SCT [Superannuation Council Tribunal] with AFCA,” it said before claiming that “the numerous shortcomings of the current EDR bodies, FOS and CIO, have been completely ignored by the Ramsay Review (and the Government) and sadly are now firmly part of the DNA of AFCA.”
“AFCA is a rebadging exercise that achieves nothing – just like moving the deck chairs on the Titanic,” the ASDAA submission said. “AFCA is nothing more than a political announcement and the appearance of action because of Government inaction to hold a Royal Commission into the Banking sector.”
The submission claimed it was no surprise the big banks had endorsed the Government’s new EDR creation.
“If anyone in Government thinks AFCA will weed out the disgraceful and entrenched poor corporate bank culture or even come close to addressing the long list of financial scandals is deluded. Only a Royal Commission can do this,” it said. “AFCA has zero investigative powers and is completely powerless and toothless to prevent the re-occurrence of financial scandals.”
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