The Parliament has approved legislation that will establish the Australian Financial Complaints Authority (AFCA), and confirmed how access to the new body will be significantly increased.
Kelly O’Dwyer MP, minister for Revenue and Financial Services, and Craig Laundy MP, minister for small and family business, said the passage of the Treaty Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill is a big win for millions of Australians and small businesses, as they will have more access to free, fast, and binding dispute resolution.
“AFCA will provide a one-stop shop to ensure consumers get a fair deal in resolving disputes with banks, insurers, super funds, and small amount credit providers, without the expense, inconvenience, and trauma associated with going to court,” O’Dwyer said.
“I am pleased to say that small businesses and primary producers will overwhelmingly benefit from the new AFCA scheme, with significant increases in the compensation available and a more flexible definition of a small business,” Laundy said.
In line with the recommendations of the AFCA transition team, headed by Malcolm Edey, former assistant governor of the Reserve Bank of Australia, the Turnbull government will increase access to AFCA by:
- relaxing the definition of the a small business to enable businesses with fewer than 100 staff to access AFCA;
- provide small business primary production producers – defined in accordance with the Income Tax Assessment Act 1997 – access to compensation of up to $2m for disputes about credit facilities of up to $5m;
- increase the cap on income stream insurance product disputes from $8,300 to $13,400 per month;
- increase the cap on uninsured third-party motor vehicle claims from $5,000 to $15,000; and
- lift the separate compensation cap for general insurance broker disputes from $174,000 to $250,000.
The AFCA will start receiving disputes from no later than Nov. 1. To achieve a smooth transition, the government is seeking a proposal for a not-for-profit company to operate the AFCA scheme to be lodged with Treasury by March 15.
A proposal will need to demonstrate how the scheme will meet the requirements for authorisation set out in the legislation — to provide a fair, independent, accessible, accountable, efficient, and effective dispute resolution service for consumers and the financial services industry.
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