The Federal Government has allowed only two weeks for stakeholders to comment on the key elements which will underpin the establishment of the Australian Financial Complaints Authority (AFCA).
The Minister for Revenue and Financial Services, Kelly O’Dwyer on Friday announced that the consultation paper developed by its independent expert, Dr Malcolm Edey, covering the transitional arrangements had been completed and opened for discussion but then only allowed a 14-day consultation period.
That meant that stakeholders, including financial planning organisations, would have to lodge their responses with Treasury before Parliament rises but with any Government decisions likely to be announced early in 2018.
The short consultation period comes despite the criticism levelled at the Government over the briefness of its earlier consultation arrangements, particularly within the dissenting report of the Labor members of the Senate Economics Legislation Oversight Committee.
O’Dwyer described AFCA as a “landmark reform that will overhaul how financial disputes are dealt with in Australia”.
“I encourage all interested parties to engage with Dr Edey and the transition team to ensure that AFCA provides enhanced access to redress, while being accountable and transparent to both industry and consumers,” she said.
The importance of the consultation paper is underlined by many of the issues it traverses, including the adequacy of monetary limits and how any increase in these monetary limits will impact professional indemnity insurance.
The consultation paper also canvassed the question of oversight of the new disputes handling body and the inclusion of the superannuation dispute within the new arrangements.
Where monetary limits were concerned, it provided a dispute limit of $1 million and a compensation cap of $500,000 for most non-superannuation disputes; unlimited monetary jurisdiction for superannuation disputes; no dispute limits and compensation caps for disputes about whether a guarantee should be set aside where it has been supported by a mortgage or other security over the guarantor’s primary place of residence; and for small business credit facility disputes, where a small business credit facility is of an amount up to $5 million, AFCA should have a compensation cap of $1 million.
