The government’s one-stop shop for consumer complaints would be incapable of improving corporate culture and, as such, wouldn’t prevent future financial advice scandals, argues one of the current dispute resolution bodies, which is refusing to participate in transitional discussions.
In the recent federal budget announcement, the government stated that the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and Super Complaints Tribunal (SCT) would be rolled into a single, streamlined service, the Australian Financial Complaints Authority (AFCA), due to begin in July 2018. It followed recommendations in the Ramsay Review.
But the CIO is refusing to participate in transitional discussions, saying the AFCA would not be equipped to protect consumers properly because it would not address culture problems within institutions.
“As the legislation has not even been introduced into Parliament, CIO has quite appropriately refused to participate in any discussions around the transition, despite pressure from others to do so,” Raj Venga, chief executive of the CIO, states in a letter to media.
He says the body’s establishment is an attempt to quiet calls for a royal commission into the big four banks, but would ineffectively tackle the problems it would need to handle to prevent future poor outcomes.
“Despite being trumpeted as something entirely new and designed to ensure ‘that consumers and small business have access to free, fast and binding dispute resolution’, AFCA has essentially the same powers and jurisdictions as CIO, FOS and the SCT,” Venga states in a submission to Treasury in relation to the exposure draft bill.
Venga also alleges AFCA, as the single consumer complaints body, could face governance problems.
In contrast to CIO, FOS has previously expressed approval of the merger and said it would increase the opportunity for consumers and small businesses to have their voices heard.
