The Australian Financial Complaints Authority (AFCA), Australia's ombudsman service for the financial services sector, has sought industry feedback on its proposed changes to the rules governing its work in helping consumers and financial firms resolve complaints.
The proposed changes to AFCA's official rules and associated amendments to its operational guidelines are designed to implement the recommendations of its Treasury-led independent review.
“AFCA has a significant three-year program of work underway to implement the independent review recommendations,” Deputy Chief Ombudsman Dr. June Smith said. “Our proposed rules and operational guidelines changes are an important component of that program.
“The aim is to ensure AFCA continues to deliver fair, independent, efficient, and effective solutions for financial disputes.”
The independent review found that AFCA was performing well. However, it suggested developing and improving the ombudsman's procedures as it consolidated its place in the financial system.
Moreover, it outlined 14 recommendations for AFCA or the federal government in its November 2021 report, but it did not recommend any increase in the jurisdiction or the monetary limits of the AFCA scheme. Considering the recommendations, AFCA engaged an external consultant to draft the proposed changes.
“These proposals are an indication of the approach we may take, but we are keen to hear from firms and consumers whose feedback will help us as we seek to enhance the AFCA scheme,” Dr. Smith said.
Consultation on the proposed changes began on March 27, 2023, and is open until May 22, 2023.
AFCA recently delved into the challenges facing the financial services industry in 2023, including a concerning number of complaints – over 60,000 as of March 2023.
On average, AFCA receives over 7,500 monthly in the current financial year, up from 6,000 monthly complaints in the 2022 financial year and 5,800 a month in the 2021 financial year.
AFCA also shared that consumer complaints against insurers in 2023 are rising compared to last year, suggesting that natural catastrophes are not the main cause – insurers are.