Review of the dispute resolution and complaints framework
The Federal Government has now received the final report of the EDR review (Ramsey Review) into the dispute resolution and complaints framework of the finance industry, including superannuation. Primarily the report recommends the establishment of a single body to deal with financial complaints. It recommends the merger of the three current bodies with jurisdiction in this space, the Financial Ombudsman Service (FOS), the Credit Industry Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).
Primarily the report recommends the establishment of a single body to deal with financial complaints.
Poor resolution of superannuation complaints
As part of the review it was found that the performance of the SCT in resolving complaints in a timely way was poor, largely due to under-funding and under-resourcing by government. Parts of the current SCT scheme are recommended to be retained including the ability to add parties to a complaint, compel the production of information and documents and a right of appeal to the Federal Court on matters of law. The single body recommended for EDR in financial matters is to be an industry based model, funded by the financial services industry but with independent oversight and governance. Oversight is to be provided by ASIC with governance by an independent board with a mix of consumer and industry representatives.
Establishment of the AFCA
On the same date that the Ramsay review was published the Federal Government announced that the Australian Financial Complaints Authority (AFCA) would be established with operations to commence from 1 July 2018. The Government has committed to provide appropriate statutory powers to AFCA to deal with the complexity of superannuation disputes. This is said to include the power to join third parties to a dispute and require the production of information and documents. The Government has stated that the dispute resolution framework for superannuation will remain substantially unchanged. The process for resolving disputes will be determined by AFCA and its board. No significant changes are expected. As recommended by the Ramsay Review ASIC will be provided with a general directions power to ensure that AFCA complies with legislative and regulatory requirements. Legislation will also be introduced to require that financial firms report to ASIC on outcomes from their own internal dispute resolution procedures.
The existing EDR bodies being FOS, CIO and the SCT will continue to operate after 1 July 2018 to work through their existing complaints. New complaints from 1 July 2018 must be dealt with by AFCA. Consumers will be given the option to transfer their complaint to AFCA should they wish to do so. At this stage it is envisaged that the SCT will continue to operate until 1 July 2020 to resolve any disputes lodged before 1 July 2018.
The establishment of AFCA and the consequent abolishment of the SCT is a welcome move which will hopefully provide more efficient, timely and robust resolution of complaints by consumers of financial services across the industry including in superannuation.