Last month, Finance Magnates reported the approval of the Australian Financial Complaints Authority (AFCA), which is being created to handle any complaints and dispute resolutions for the Australian financial industry.
As ASIC has been charged with the responsibility of overseeing the AFCA, the regulator has now released an updated guidance on the guidelines through which the new body will operate. ASIC is attempting to ensure a smooth transition to AFCA, and therefore is vying to provide companies and the public with as much information as possible.
ASIC Deputy Chairman Peter Kell commented on the updated guide: “ASIC is issuing draft updated RG 139 now as we believe that clarity about ASIC’s policy approach at this stage of the transition will assist all stakeholders. It will also enable ASIC to take into account and respond to any emerging issues that arise during the transition period.”
AFCA Still Making Changes
The official commencement of the AFCA has been designated for November 1 at the latest. By then, there are still several tasks that must be completed in order for the new organization to be operable. The Minister of Finance must first approve of the AFCA. The approval process will be much smoother once all challenges have been met, and there is a comprehensive blueprint for the transition process.
Moreover, the newly established board of the AFCA will first need to consult on the specific terms of reference with which it will operate. The AFCA is said to be seeking consultation on various policy issues during a 5-week period. One of the issues that it is attempting to assess, is the extent to which financial firms would need any transitional relief from obligations pertaining to the disclosure of any external dispute resolutions.
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The AFCA is urging public responses to its consultation, which will be accepted by April 6. The acceptance of responses illustrates the willingness to invite information from any source, in order to better prepare and address any issues that would hinder the proper functioning of the authority.
Brokers Concerned over AFCA Terms
ASIC and the AFCA are working together to also alleviate some of the growing concerns that brokers have expressed over the new authority. Some brokers have indicated that the new system is flawed, and that there is potential for abuse by clients.
One of the specific complaints that had been introduced by at least two brokers, specifies that brokers are responsible for handling any costs associated with a filed complaint, regardless of whether or not there is validity to the claims. The brokers make a strong point, since it is out of their control if any one person decides to file a complaint, without relevance to its legitimacy.
The establishment of the AFCA is aimed at alleviating some of the time and resource-consuming tasks that have impacted ASIC. In addition to handling dispute resolutions to this point, ASIC has been handling a vast umbrella of financial regulatory responsibilities, and the AFCA is intended to assist in the process. Earlier this year, ASIC also sent a questionnaire to licensees, asking for additional information, in an effort to clarify its rules for OTC derivative issues.