ASIC consulting on creation of new Australian Financial Complaints Authority (AFCA)

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After the bill to create a new Complaints authority passed Australia’s parliament on February 14 – mandating that the new authority to be named Australian Financial Complaints Authority (AFCA) be in action by November 2018 – Australia’s financial regulator ASIC today released a draft updated Regulatory Guide 139, Oversight of AFCA for public consultation.

The Bill to establish AFCA passed, as noted, on February 14, 2018, and Minister for Financial Services, the Hon. Kelly O’Dwyer has announced that AFCA will commence operations no later than November 1, 2018. There are a number of transitional steps that need to take place before AFCA commences, including that the Minister will authorise AFCA, and
the AFCA Board will consult on the scheme’s terms of reference.

Peter Kell ASIC

Peter Kell, ASIC

ASIC Deputy Chair, Peter Kell stated:

ASIC is issuing draft updated RG 139 now as we believe that clarity about ASIC’s policy approach at this stage of the transition will assist all stakeholders. It will also enable ASIC to take into account and respond to any emerging issues that arise during the transition period.

ASIC said it will finalise this guidance to coincide with AFCA commencement – that is, no later than November 1, 2018.

There has already been extensive public consultation on these reforms through the progress of the Review of the financial system external dispute resolution and complaints framework led by Professor Ian Ramsay, as well as the release of a Treasury consultation paper on the establishment of AFCA in November 2017.

Deputy Chair Kell added:

Updated RG 139 retains many longstanding policy settings that were considered by the Ramsay Review and endorsed by Government, including the handling of systemic issues and periodic independent scheme reviews. It also aligns with the new legislative requirements in the AFCA Act.

ASIC is consulting for a period of five weeks on a limited number of policy issues. This includes whether firms need any transitional relief from external dispute resolution disclosure obligations. ASIC invites responses to its consultation by April 6, 2018.

The operator of the scheme will be authorised by the Minister, and the scheme will be subject to ongoing oversight by ASIC. ASIC will also publicly consult on new IDR standards and the mandatory Internal Dispute Resolution reporting requirements that are also contained in the AFCA legislation, but this consultation will not take place until after AFCA commencement.

The full text of ASIC’s proposals and consultation for AFCA can be seen here (pdf).

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