AFCA will weaken superannuation protections for consumers: Labor

Rolling the Superannuation Complaints Tribunal into the Australian Financial Complaints Authority will weaken consumer protections, says Labor.

The Government has a Bill before Parliament to roll three financial complaints bodies, including the SCT, into the new Australian Financial Complaints Authority (AFCA) – the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017.

The Coalition-dominated Senate committee which had been conducting an inquiry into the Bill recommended it be passed. However the Labor members of the Committee disagreed. They said, apart from the superannuation changes, the Bill was “largely a rebranding exercise”, as the AFCA will have no new powers.

“In relation to superannuation disputes, which are currently dealt with by the statutory Superannuation Complaints Tribunal, the bill is much worse than a rebranding exercise and will weaken outcomes and protections for consumers,” said the Labor section of the report.

The Labor Senators called for the Superannuation Complaints Tribunal (SCT) to remain in place.

“The SCT itself identified a number of significant instances in which this bill would leave consumers with fewer protections when compared to the SCT. This is largely due to the proposed change from a statutory tribunal to an ombudsman scheme established by industry as a private company limited by guarantee.”

Though there are issues with the SCT. Stakeholders were “almost unanimous” in stating that this was due to levels of funding, not the structure of the tribunal.

“The only real criticism levelled against the Superannuation Complaints Tribunal is that it has a backlog of complaints and it has been widely acknowledged that this backlog is due to staffing and funding reductions. These reductions have been allowed to occur despite the fact that the SCT’s funding is already charged to industry by a levy.”

The SCT said itself, in a submission, that it lacked the budget to deal with existing complaints before it would be due to be rolled in to AFCA.

Labor said there had been an almost 30% cut in staffing at the SCT since the Coalition won the 2013 election.

“It is unacceptable for this Government to dramatically reduce funding and staff at the SCT, and then to turn around and complain it is too slow in resolving disputes.”

“It is even more unacceptable for this Government to then use this as an excuse to abolish the body and transfer its functions to a non-government private body and to reduce consumer protections in the process.”

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