Millions of Australian consumers and small businesses are today the big winners, with the passage of legislation to establish the Australian Financial Complaints Authority (AFCA), and confirmation of how access to the new body will be significantly increased.
The Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP, and Minister for Small and Family Business, the Hon Craig Laundy MP, said significantly more consumers and small businesses will have access to free, fast and binding dispute resolution following the passage of the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill.
"AFCA will provide a one-stop shop to ensure consumers get a fair deal in resolving disputes with banks, insurers, super funds and small amount credit providers, without the expense, inconvenience, and trauma associated with going to court," Minister O'Dwyer said.
The Turnbull Government is also increasing access to redress by widening the range of disputes that AFCA will be able to hear, in line with the recommendations of the AFCA Transition Team, chaired by Dr Malcolm Edey, former Assistant Governor of the Reserve Bank of Australia (RBA).
- the definition of a small business will be relaxed, so that any business with fewer than 100 staff can access AFCA;
- small business primary production producers – defined in accordance with the Income Tax Assessment Act 1997 – will have access to compensation of up to $2 million for disputes about credit facilities of up to $5 million;
- the cap on income stream insurance product disputes will be increased from $8,300 to $13,400 per month;
- the cap on uninsured third party motor vehicle claims will increase from $5,000 to $15,000; and
- the separate compensation cap for general insurance broker disputes will be increased from $174,000 to $250,000.
"I am pleased to say that small businesses and primary producers will overwhelmingly benefit from the new AFCA scheme, with significant increases in the compensation available and a more flexible definition of a small business," said Minister Laundy.
"The Turnbull Government has enhanced access to AFCA by redefining a small business as any business with fewer than 100 employees, and by lifting the compensation available to those small businesses that are primary producers to $2 million."
Based on the expert advice of Dr Edey, the Government has decided that AFCA will start receiving disputes from no later than 1 November 2018. To achieve a smooth transition, the Government is seeking a proposal for a not-for-profit company to operate the AFCA scheme to be lodged with Treasury by 15 March 2018.
A proposal will need to demonstrate how the scheme will meet the requirements for authorisation set out in the legislation — to provide a fair, independent, accessible, accountable, efficient and effective dispute resolution service for consumers and the financial services industry.
Further details on the authorisation process can be obtained from the AFCA Transition Team email@example.com.