The major backers of the Government’s establishment of an Australian Financial Complaints Authority (AFCA) have welcomed passage of the enabling legislation through the Parliament.
Unusually for a Government agency, the Australian Securities and Investments Commission (ASIC) issued a statement welcoming the AFCA establishment, as did the Financial Ombudsman Service (FOS), the SMSF Association, the Australian Bankers’ Association (ABA).
Ironically, while the ABA welcomed the AFCA establishment as a means of better protection consumers, the SMSF Association chief executive, John Maroney said it would give SMSFs access to a dispute-settling mechanism that would enhance their ability to deal with large institutions.
“This is an important reform for the SMSF sector. Giving SMSF members the ability to be able to have their grievances with a large institution dealt with by AFCA and avoid lengthy and costly legal proceedings is to be commended,” Maroney said. “Anecdotal evidence suggests that SMSF members often do not pursue their complaints with banks, insurers and super funds because of the potential legal costs and complexity.”
The inclusion of the Superannuation Complaints Tribunal (SCT) within the AFCA model has been strongly resisted by larger superannuation funds, something which was reflected in the voting numbers on the legislation in both the Senate and the House of Representatives.
There are also concerns about whether the Government has provided adequate funding to ensure a smooth transition to a model which seeks to encompass the SCT, FOS, and the Credit and Insurance Ombudsman.