Earlier this week, ASIC extended the scope of complaints able to be lodged with the Australian Financial Complaints Authority (AFCA). However, some have been left deeply unsatisfied with the lack of clarity surrounding how the rule changes will be carried out.
Starting on 1 November 2018, AFCA has been responsible for fielding complaints from consumers and small businesses, as a consolidation of the three predecessor external dispute resolution (EDR) schemes.
Now, Australian consumers and small businesses that were harmed by financial misconduct can retroactively lodge complaints dating back to 1 January 2008.
“The big issue that can come out of this is that people will be judged on today’s credit policies, but when their loan was written, it was written under policies back at that point in time. The world has changed,” explained FBAA managing director Peter White.
“You can’t cry foul today, if back then it was completely appropriate. That has no sense or fairness to it whatsoever.
“We oppose this, because there’s a name and shame component to it. Plus, I’m very concerned that they’ll pull the trigger prior to full investigations where appropriate outcomes are determined.”
David Locke, AFCA chief ombudsman and CEO, has welcomed the change, acknowledging that there are “thousands of complaints” that were previously unable to be lodged as they fell outside of the newly-altered parameters.
“We expect that these matters are likely to be highly complex, and further complicated by the number of years that have passed since the issue occurred,” he added.
According to AFCA, the legacy complaints will be managed through its “normal process.” However, White is calling for the body to provide more concrete information.
White said, “Within the royal commission, the breach of trust from the banks was all through a lack of transparency. Yet here we are, having almost the same conversation again around the need for transparency.
“We need to be able to trust what AFCA is doing. They need to step up to the plate and give a clear understanding as to how these determinations will be measured.
“I was always a big advocate of AFCA being formed, so I’m not against them and the system as such, but that transparency has got to play out so we’re all confident in the fairness of how determinations are going to be made,” he finished.