The Australian Financial Complaints Authority (AFCA) may be only months old but it is already calling for changes which would place a greater onus on Australian Financial Service Licensees to treat consumers more fairly.
In a submission responding to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, AFCA has suggested the adoption of some elements of the United Kingdom’s regulatory framework.
“Australian financial services regulation currently lacks but needs an overarching focus on fair treatment of customers,” it said.
The AFCA submission said that there currently existed an opportunity to reframe the current approach to consumer protection regulation in the financial services industry and that instead of focusing on separate functional activities, conduct regulation should be more clearly based on the fair treatment of consumers at all stages of what is an increasingly integrated product design, origination and distribution system.
“This would help ensure the financial system better meets the needs of all users, including consumers and small businesses,” it said.
In doing so, the AFCA submission suggested that elements of the UK framework could assist in addressing the danger of conduct risk, with a new statutory obligation being imposed on licensees and representatives and credit representatives “expressed as an obligation to treat customers fairly”.
“It could be elaborated by (the Australian Securities and Investments Commission ASIC through guidelines and binding rules which could be tailored to particular market sectors, products, issues or parts of the product life cycle or consumer experience life cycle,” the submission said.
“It could apply to all of the licensee’s activities and decisions which affected customers and all aspects of the product life cycle and customer experience life cycle. Board members and senior management of financial firms could also be under a conduct obligation in respect of their duties to treat customers fairly.”