Australia’s new ‘one-stop shop’ for financial complaints launches today

HAVE a dispute with a bank or financial services company? From today, David Locke is the man who can help.

THE head of Australia’s new “one-stop shop” for financial complaints will pressure banks to set up remediation schemes for victims of systemic misconduct rather than forcing each customer to make individual claims.

David Locke, chief executive of the Australian Financial Complaints Authority, said the bodies AFCA replaces — the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO), and the Superannuation Complaints Tribunal (SCT) — had been “too inward-looking”.

AFCA, which officially launches today, will be focused on “driving up standards”.

“We have brought together the work but we’re not bound by the old ways of doing things,” Mr Locke said. “We have a very different remit in terms of the rules, new approaches, more face-to-face conciliation.”

The banking royal commission had exposed “very significant failings across the financial sector”, with Mr Locke pinning the blame on “culture, governance and leadership”.

“Public trust in the financial industry has taken a serious battering,” he said. “Rebuilding that trust can be challenging.”

Mr Locke, formerly assistant commissioner at the Charities and Not-for-Profits Commission, said the new dispute resolution body would make it easier for victims.

“For many people, going to court is prohibitively expensive,” he said.

The predecessor schemes lacked a “two-way” flow of information with the financial regulators to ensure action was taken when poor behaviour was identified.

“We want to work with the industry to address the issues causing these disputes,” he said.

AFCA will also prioritise speedy resolution of complaints.

“Our focus is on being much more proactive to reach out to consumers a lot quicker,” he said.

“Eighty per cent of the 40,000 matters last year were resolved within 90 days, but often people’s lives are on hold. If it’s a small business, organisations may have gone bust.”

AFCA has significantly higher thresholds than previous schemes, meaning it will be able to handle far more disputes than the others.

The value threshold for consumer disputes is $1 million, almost double that of FOS and the CIO, with possible compensation of up to $500,000.

Small businesses will be able to have complaints heard where they relate to a credit facility of up to $5 million, with a compensation cap of $1 million, triple the existing limits.

“I want to command a service that has broad public support,” Mr Locke said.

The Australian Banking Association (ABA) welcomed the launch.

“A fast, free and binding service which deals with disputes outside of court is the best way for a customer’s issue to be heard and quickly resolved,” ABA CEO Anna Bligh said in a statement.

Small Business Ombudsman Kate Carnell said the new service would save small businesses time and money by “significantly reducing the need for litigation”.

“The consolidation of the AFCA addresses a key recommendation of our Small Business Loans Inquiry,” she said in a statement.

“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.”

The Federal Government provided $1.7 million for the establishment of AFCA as part of the 2018-19 Budget.

In a statement on Wednesday, Treasurer Josh Frydenberg said AFCA would “bolster community confidence by providing consumers who have suffered a loss with greater access to free and fair dispute resolution”.

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