New Scheme for Financial Services & Product Disputes

MOST individuals and small businesses are consumers of financial services and products provided by banks, insurers or other providers. Until recently, complaints regarding unfair treatment or products were lodged with one of the following:

  1. Financial Ombudsman Service (FIO);
  2. Credit and Investments Ombudsman (CIO); or
  3. Superannuation Complaints Tribunal (SCT).

Since November 1, these complaints are no longer lodged with FIO, CIO and SCT because these bodies have been replaced by the Australian Financial Complaints Authority (AFCA). AFCA provides a single, external dispute resolution (EDR) scheme for consumers and small business to attempt to resolve complaints about financial service products.

The AFCA’s EDR service is free and provides a dispute resolution alternative to court action. The AFCA’s approach to complaints appears to follow a three-step process:

  1. Encouraging the provider and consumer to resolve the dispute directly;
  2. Working with the parties through methods such as conciliation and negotiation; and
  3. If that fails, making a determination (which can include “remedies” such as compensation, varying terms of a financial contracts, forgiveness/variations of a debt and many more).

If a complaint progresses to a determination by AFCA, the complaining party will have a choice whether to accept the determination (which then becomes binding) or to reject the determination and pursue court action. The AFCA service is not mandatory; consider what is right for your circumstances.

*The legal information in this article is of a general nature only and not intended to be legal advice to rely upon.

Walker PenderNew Scheme for Financial Services & Product Disputes