Financial firms will now be required to co-operate with AFCA

Holders of Australian Financial Services Licences will be required to co-operate with the Australian Financial Complaints Authority (AFCA) to resolve disputes, under changes made by the Government.

Treasurer Josh Frydenberg announced that the Government was making the change through regulations, following from a recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

“This includes making available to AFCA all relevant documents and records relating to the issues in dispute,” he said.

“Notably, the Government has gone further than Commissioner Hayne recommended, extending the co-operation requirement to all AFCA members including Australian Credit Licence holders and Registrable Superannuation Entities.”

Commissioner Hayne noted in the final report that there was “little benefit in mandating the existence of systems if there is no obligation to comply with those systems”.

ASFA Chief Ombudsman and Chief Executive Officer David Locke said the change was an important step in ensuring consumers had their financial complaints resolved.

“Commissioner Hayne recommended the law be amended to require AFCA members to take reasonable steps to co-operate with us in the resolution of disputes,” he said.

“This was an important recommendation and we are pleased that from today, financial firms will be required by law to provide all relevant documents and records relating to complaints.”

Mr Locke said that AFCA expects all financial firms to co-operate fully and respond promptly and comprehensively to all requests.

“Commissioner Hayne recommended the law be amended to require AFCA members to take reasonable steps to co-operate with us in the resolution of disputes,” Mr Locke said.

“This was an important recommendation and we are pleased that from today, financial firms will be required by law to provide all relevant documents and records relating to complaints.”

The immediate implementation of the recommendation of the Royal Commission was one of the recommendations of the recently released report of the Senate inquiry into resolution of disputes with financial service providers within the justice system.

The Senate inquiry also recommends other changes to AFCA, including increasing the compensation cap for consumers to $2 million and extending AFCA membership to debt management firms, ‘buy now pay later’ providers, FinTechs, and small business lenders, amongst others.

It also recommended the “establishment of a retrospective compensation scheme independent of the Australian Financial Complaints Authority to allow victims of alleged misconduct by banks who received a past external dispute resolution determination or court judgment that was manifestly unjust to apply to the scheme to have the matter reviewed with the consent of the bank”.

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