The Coalition Government is providing expanded access to redress for consumers and small businesses harmed by financial misconduct, as we continue to take action on all 76 recommendations in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Restoring trust in Australia’s financial system is part of our plan for a stronger economy.
Going further by paying unpaid determinations
Through regulation, the Government has now enabled the payment of legacy unpaid external dispute resolution determinations issued under the Terms of Reference for the Financial Ombudsman Service and the Credit and Investments Ombudsman Rules.
Consumers and small businesses that have been harmed by misconduct and received determinations in their favour will receive up to $30 million in compensation owed to them by bankrupt financial firms that they never would have received otherwise.
The Government is working with the relevant agencies to ensure that payments start to be made over the coming weeks.
Recommendation 4.11 – Co-operation with AFCA
Australian Financial Services Licence (AFSL) holders will now be required to co-operate with the Australian Financial Complaints Authority (AFCA) in the resolution of disputes, following the Government’s implementation, also through regulation, of the Royal Commission’s recommendation 4.11. This includes making available to AFCA all relevant documents and records relating to the issues in dispute.
Notably, the Government has gone further than Commissioner Hayne recommended, extending the co-operation requirement to all AFCA members including Australian Credit Licence holders and Registrable Superannuation Entities.
In the Final Report, Commissioner Hayne noted that while the Corporations Act mandates the form of AFSL holders’ internal and external dispute resolution systems, “There is little benefit in mandating the existence of systems if there is no obligation to comply with those systems.”
Today’s announcement, as Commissioner Hayne says, “…will serve to give statutory force to the promises that AFSL holders have made to [AFCA], and will allow the Australian Securities and Investments Commission to take action if those promises are not kept.” A breach of the requirement may give rise to a civil penalty.
A strong economy requires a strong, accountable financial sector that Australians can trust.