The Australian Financial Complaints Authority (AFCA) has said it welcomes the report of the Independent Review into its financial dispute resolution service. AFCA agrees in principle with the report’s 14 recommendations.
“Overall, this is a very positive report card, particularly for an organisation barely three years old,” Chief Ombudsman and Chief Executive Officer David Locke said.
“We welcome the report’s endorsement that we are delivering a fair, independent, efficient and effective complaints resolution service. The comments on our performance, including from the former Federal Court judge brought in as an independent expert, are highly encouraging.”
“We were also pleased to read the Government’s response to the findings of the Review, which supports the recommendations and notes that AFCA is performing well and providing an effective dispute resolution service for consumers and small businesses.”
The report says, “AFCA is performing well in a difficult operating environment and a changing regulatory landscape”. It reaffirms AFCA’s impartiality and its fairness jurisdiction, acknowledging that this approach underpins the body’s “critical” role as an efficient alternative to a tribunal or court for consumers, small businesses and financial firms. The report says it “did not find evidence to support a view that there are systemic issues with the independence of AFCA’s operations”.
The Review, conducted by Federal Treasury, was a requirement of the legislation that established AFCA. The report was delivered to the Minister for Superannuation, Financial Services and the Digital Economy, and Minister for Women’s Economic Security, Senator Jane Hume, who released it today.
Locke said AFCA was committed to continuously improving its complaints resolution scheme for all participants and the report would aid this work.
“We know there are areas where we can improve as we move out of our establishment phase, and some of these have been identified in the Review,” he said.
In its first two years, AFCA received more than 152,000 complaints, the report notes. The average time to resolve those complaints was 74 days, which the report says compares favourably with the performance of its UK counterpart and AFCA’s predecessor schemes.
Meanwhile VACC has some interesting insights into the recommendations and feels that AFCA hasn't addressed systemic issues. Download the full report here: VACC responds
Recommendation 2 The Review finds that AFCA needs to exercise caution in the application of its fairness jurisdiction. Recommendation 2 considers that in exercising its fairness jurisdiction when making decisions, AFCA should have primary regard to the four factors identified in its Rules – legal principles, industry codes, good industry practice and previous determinations.
Regarding the MVIRI Code - which was recently mandated in SA - VACC says it advocating that this become law in Victoria and across the country. VACC's report states. 'The current voluntary national code (except for it being mandated in NSW) is not working, has limitations, and requires changes to improve its effectiveness. Regrettably, insurers have increasingly dismissed the principles outlined in the MVIRI Code and instead have chosen, at times, to dispute repair estimation costs, unfairly cash settle customers, and delay vehicle assessments, or move vehicles away from one repairer to another, even when the customer has ‘choice of repairer’ in their insurance policy.'
Recommendation 3 AFCA should not advocate for, nor act in a manner that otherwise advantages, one party such that the impartiality of the complaints resolution process is compromised .VACC is very much behind this. Paint & Panel has published AFCA findings previously that could be seen to favour the insurer.
Recommendation 9 AFCA should amend its Operational Guidelines to remove the requirement for an applicant to demonstrate an error of law to access the formal forward-looking review mechanism. Applicants should be able to access it if they are able to demonstrate that the AFCA determination adopts an approach that could have a significant impact across a class of consumers, businesses or transactions.
Recommendation 12 and Recommendation 13 Where a systemic issue has been referred to ASIC or another regulator, AFCA should cease its investigation of the systemic issue. ASIC and other regulators should advise AFCA of the outcomes of the referrals they receive. However, AFCA should continue to resolve any relevant individual complaints.
As AFCA has a huge amount of data on recurring issues the VACC feel it should publish a greater level of detail on the types of issues identified as systemic issues, in particular those referred to regulators.