AFCA examines possibilities for fairer funding model
![image](https://moneymanagement-live.s3-ap-southeast-2.amazonaws.com/s3fs-public/field/image/Funding-300.jpg)
![image](https://moneymanagement-live.s3-ap-southeast-2.amazonaws.com/s3fs-public/field/image/Funding-300.jpg)
The Australian Financial Complaints Authority (AFCA) is examining how it can reduce cross-subsidisation when it comes to levy funding and treat smaller firms more fairly.
Speaking at the AFCA member forum, chief executive, David Locke, said AFCA was awaiting the results of a Treasury independent review into the body which was expected “any day now”.
Regarding what the review might advise on fees and funding, Locke said AFCA was already exploring how it could reduce cross-subsidisation in particular.
“This is something we have been considering and we are awaiting any recommendation from the independent review,” Locke said.
“Our starting point was to establish principles and one of us was around cross-subsidisation. You don’t want to have insurers cross-subsidising the work they handle with banks or financial advisers being granted fees related to other areas.”
Another area was how funding could work for small firms or those which received few complaints.
“We are also looking at how we can keep fees low, particularly for matters that involve a small amount of funds and where they are being resolved very early on, in the registration stage,” Locke said.
“We’re looking at how we can work with smaller members or members who have very few complaints.
“Clearly, when you make any changes to a funding model, it will mean you have some people who pay less and some who pay more so we will have to look at how fair that is. We are very conscious of that and want to have a sustainable funding model as we are very aware AFCA is funded by its members and we want it to be fair.”
Recommended for you
A NSW-based adviser has been banned from providing financial services for five years for inappropriate advice and the AFSL of his business has been cancelled by ASIC.
The introduction of Rhombus Advisory has caused a shift in the top advice licensees as Insignia separates its advice business into two channels.
Given the clear divergence between the cost of financial advice and clients’ willingness to pay, two experts explore how advisers can transform the way they convey value to potential clients.
Nearly 18 months since Invest Blue adopted its nine-day fortnight structure to support employee wellbeing, the national advice firm has enjoyed positive results across all metrics.