Free, fast and binding dispute resolution to improve small business access to justice
Small businesses with a complaint about a financial firm can now direct their grievances to the Australian Financial Complaints Authority (AFCA) which opens for business today.
“The AFCA is a single external complaints resolution scheme, replacing the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal,” the Small Business Ombudsman, Ms Kate Carnell said in welcoming the new service.
“With Australian Securities and Investments Commission oversight, the AFCA will provide free, fast and binding dispute resolution to small businesses, saving them time and money by significantly reducing the need for litigation.
“It will also possess the expertise to deal with small business lending disputes, significantly improving small business access to justice and providing the forum where the needs of small business are understood.
“Small businesses with fewer than 100 employees will be able to seek resolution of a dispute where the credit facility is up to $5 million.
“Dispute cases could potentially receive compensation of up to $1 million and the compensation cap for agricultural small businesses is up to $2 million.
“The consolidation of the AFCA addresses a key recommendation of our Small Business Loans Inquiry.
“We will monitor the AFCA’s engagement with small business disputes and hope to see a significant reduction in the number of small businesses winding up in court.”
Membership of the new non-profit company will be required under law or a licence condition of a financial firm. AFCA operations will be financed by contributions made by its members and so the scheme will be free to consumers.
The AFCA will not only be the single point of contact for complainants for EDR services, but will have higher monetary limits and will be more accountable to users, including by having an independent assessor to deal with complaints about its handling of disputes. Its terms of reference will also support its dispute resolution functions and legislation in the case of superannuation disputes.
The Minister for Revenue and Financial Services has appointed Helen Coonan as the inaugural AFCA chair.
