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Australian government updates dispute resolution bill for small businesses, consumers

(13 September 2017 – Australia) The Australian Government has announced that it will establish “a new one-stop shop dispute resolution scheme”, to be known as the Australian Financial Complaints Authority (AFCA), aimed at improving how financial disputes are dealt with.

Following consultation feedback, the Minister for Revenue and Financial Services, Kelly O’Dwyer MP, said the Government will make a number of improvements to the Treasury Laws Amendment Bill 2017.

According to a statement from the Minister, AFCA will replace the three existing schemes – the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).

In the statement, the Government said “AFCA’s monetary limit of A$1 million and compensation cap of A$500,000, which is almost double the existing limits, will significantly enhance access to redress for consumers and small businesses who wrongfully suffer losses.”

Further, small business will be able to lodge a dispute where the credit facility is of an amount up to $5 million and will be able to receive compensation of up to $1 million. This is almost triple the existing monetary limit and compensation cap.

Today’s announcement will confirm the key legislative elements of the establishment of AFCA and clarifies that the transition team, being led by Dr Malcolm Edey, will undertake stakeholder consultation in order to develop AFCA’s terms of reference, governance and funding arrangements.

“These changes provide industry and consumers with certainty on the AFCA framework and the opportunity to engage in further consultation with the transition team on AFCA’s TOR. Constructive stakeholder engagement will underpin the smooth commencement of this landmark reform,” Minister O’Dwyer said.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnel, who conducted an inquiry into small business loans said in a Linked In post, that she welcomed the announcement, saying it will “save time and money by significantly reducing the need for litigation.”