Australia Markets open in 8 hrs 47 mins

The new financial mediation body you need to know about

The Australian Financial Complaints Authority is the “one stop shop” for financial disputes and complaints. Photos: Getty

Do you have a complaint about how you’ve been treated by a bank or financial services provider?

As of today, the newly created Australian Financial Complaints Authority (AFCA) will be your “one stop shop” to handle your complaints.

Also read: Why 5 million Aussies have landed themselves on the ATO’s watch-list

Aussie consumers with a complaint relating to credit, loans, insurance, payments or superannuation can call AFCA, who will help resolve disputes between consumers and small businesses and their financial services firms.

AFCA will replace the previously combined complaints services of the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).

AFCA CEO and chief ombudsman David Locke said the new dispute body would be “easy to use, free and efficient” for Australians.

“We will use a range of skills including conciliation and negotiation to find fair solutions for all the parties,” he said.

“Where matters cannot be settled then we will make timely and impartial determinations based upon the evidence.”

The new body is expected to receive over 55,000 cases in its first year of operation.

Source: AFCA.org.au

AFCA independent chair Helen Coonan said that the new dispute resolution body would “play an important role in restoring trust in Australia’s financial institutions” in light of the banking royal commission.

“We will influence reform in the financial services sector by raising standards and improving internal practices to reduce and resolve disputes,” Coonan said.

In an announcement about the new body, treasurer Josh Frydenberg and assistant treasurer Stuart Robert said AFCA would spare customer and small businesses from costs and inconvenience associated with taking complaints to court.

Also read: “Bulls**t”: Atlassian CEO calls out PM’s “fair dinkum power”

AFCA would also have advantages that the separate three bodies didn’t, such as “significantly higher monetary limits and compensation caps”.

  • AFCA can consider disputes to the value of under $1 million and award compensation of up to $500,000, representing nearly double the limits of FOS and CIO
  • Small businesses can have their credit complaints heard if it relates to credit of under $5 million and can be compensated up to $1 million (triple the limits of FOS and CIO)
  • AFCA can compensate up to $2 million for small business primary production disputes
  • AFCA won’t have a monetary limit for superannuation complaints.
Banks welcomes the new body

The Australian Banking Association (ABA) expressed its support for the new dispute resolution body.

“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.

Merging dispute resolution schemes would ensure greater consistency for the consumer, she added.

“The Banking Code of Practice will be used by AFCA as the new benchmark for industry practice, considering in its investigations if a bank has breached the Code and therefore its contract with the customer.”

Also read: Caught in a debt trap? Here’s 8 things you can do

The government outlined in its 2018-19 budget that it would allocate $1.7 million to AFCA’s establishment.

AFCA is also funded by contributions from the broader financial services industry, such as banks.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.