Australian small business owners now have a new avenue for help with financial complaints with the newly-opened Australian Financial Complaints Authority (AFCA), opening its doors today.
AFCA was announced earlier this year to be a one-stop shop for financial services complaints and will replace the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal.
Why was the AFCA created?
The financial services sector isn’t popular at the moment and confidence has severely plummeted.
In the 2017 budget, then-treasurer Scott Morrison said AFCA was created and essential to “ensure consumers have access to free, fast and binding dispute resolution services”, and reduce the stress associated with pursuing complaints through the courts.
What does the AFCA do?
AFCA will first resolve complaints via informal methods such as mediation and conciliation, however, if this does not succeed, the authority has the ability to make binding rulings on financial firms and force them to take certain courses of action. These include remuneration, debt forgiveness, fee repayment or waiving, contract rectification, and modification of insurance claims.
In comments to SmartCompany, newly appointed chief ombudsman and chief executive of AFCA David Locke said the new complaints authority will have a “very strong focus” on small business.
“We know that when small businesses experience financial issues, they need to be able to access dispute resolution services quickly, easily and appropriate to their specific needs. Due to the costs involved, the courts are not a practical option for most small businesses,” Locke says.
“This focus on support for small business is reflected in AFCA’s strategy; operationally we are providing additional resources to consider small business complaints as well as ensuring that the process for considering complaints from small businesses meets their needs and is efficient.”
Locke went on to say the AFCA is aiming to be focused more on consumer and SME engagement compared to its predecessors, hoping to be proactive in not only resolving complaints but to “educate and mitigate” their occurrence.
Can I use the AFCA’s service?
If you are a business with fewer than 100 employees, you can utilise the AFCA regardless of your annual turnover.
The definition of the AFCA is more liberating in terms of what the body can cover, especially when compared to the Financial Ombudsman Service’s definition of having fewer than 20 employees.
“Additionally, the limit for a small business credit facility has increased from $2 million to $5 million and the compensation cap has more than tripled from $323,500 to $1 million, with a higher cap of $2 million for primary producers,” he says.