AFCA updates loom for advice firms

Tahn Sharpe

By

June 19, 2018

Advisers need to be aware of incoming changes to the complaints system and make sure they complete the necessary updates internally, the lead ombudsman for the Financial Ombudsman Service has said.

June Smith, speaking at the Professional Planner Licensee Summit in the Blue Mountains, said it was incumbent upon advisers to be across the transition to a single complaints authority and to be able to explain this to clients.

“If you want to know what documentation or communications need updating between now and November 1, think of any immediate communications methods to clients,” Smith explained. “That means websites need to be updated and oral scripting for staff, too, who will need to be trained.”

While website and customer service information updates are required by November 1 this year, advisers also need to plan for changes to mandated documentation by mid-next year.

“You’ve got till July 1, 2019, to change the script within disclosure statements to talk about the new [AFCA] scheme, including Product Disclosure Statements, Statements of Advice and the Financial Services Guide,” Smith says.

The need for updates comes after a government-led review into the external dispute resolution (EDR) framework in the financial system led to the passage of the Australian Financial Complaints Authority AFCA Bill in December 2017. As a result, the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT) will merge into the new AFCA body.

Consumers will be able to lodge complaints with FOS, the CIO and the SCT up to and including October 31. Complaints can then be lodged with AFCA at its commencement date of November 1, 2018. Unresolved complaints transferred to the new body will be dealt with under the old FOS or CIO terms but no complaints will be transferred from the SCT to AFCA.

Earlier in June, AFCA chair Helen Coonan announced that the current assistant commissioner of the Australian Charities and Not-for-Profits Commission (ACNC), David Locke, would be the complaints authority’s inaugural chief executive.

The ombudsman service’s Smith said firms need to make sure it was clear to clients which scheme a dispute should be lodged with and what would happen to the dispute from November onwards.

“Anything you’ve got on your websites, anything people are saying over the phones, or even in your IDR [Internal Dispute Resolution] letters themselves, make sure that they’re clear,” Smith explained. “Otherwise you’ve got until July 1, 2019, to put in place and change the more significant dates around EDR obligations.”

Smith also urged advisers to brush up on the other changes the consolidation of complaints bodies would bring up, including increases to the compensation cap sub-limits and amendments to requirements for reporting to ASIC.

“If you haven’t read the rules already… they’re not 700 pages long, so get involved and have a look,” Smith said.

Financial firms are required to have joined AFCA by September 21 this year; however, Smith said the transition to membership for FOS members was mostly complete.

“Ninety-eight per cent of FOS members have already done their annual assessment and have already done their member declarations for transition,” she said. “So they’re all good.”


TOPICS:   asic,  Australian Financial Complaints Authority,  Dr June Smith,  Financial Ombudsman Service,  Superannuation Complaints Tribunal

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