Consumers have a right to be protected from misconduct or conduct that falls below community standards and expectations. They also have a right to redress when there are breaches of the law. The Government has implemented important reforms to ensure this redress occurs.
We have established the Australian Financial Complaints Authority (AFCA) — a one‑stop shop for external dispute resolution to enable more consumers and small businesses to access fast and free dispute resolution including for banking, insurance, superannuation and financial advice. AFCA operates with higher compensation limits than its predecessors — for consumers ($500,000), for small businesses ($1 million) and primary producers ($2 million).
ASIC has also been provided with additional powers to allow it to set standards in relation to financial entities’ internal dispute resolution practices and to collect data from entities on these activities.
We will further improve consumer and small business access to redress by going beyond the Royal Commission’s recommendations by:
- paying around $30 million in compensation owed to almost 300 consumers and small businesses for the unpaid determinations of the Financial Ombudsman Service and the Credit and Investments Ombudsman;
- establishing for the first time an industry‑funded and forward looking compensation scheme of last resort to be administered by AFCA as recommended by the Royal Commission;
- expanding the remit of AFCA for a period of 12 months to accept applications for disputes dating back to 1 January 2008 (the period covered by the Royal Commission) for disputes that fall within AFCA’s thresholds. This will ensure that consumers and small businesses that have suffered from misconduct but have not yet been heard will be able to take their cases to AFCA and have them considered; and
- strengthening oversight and transparency of financial entities’ remediation activities by enhancing AFCA’s role in the establishment and public reporting of firm remediation activities.
In recognition of the need for greater stability and coordination of funding for financial counselling across Australia, the Government will also commence an immediate review of the coordination and funding of financial counselling services.