New EDR scheme established for financial services complaints

The Government has passed legislation which introduces a new external dispute resolution (EDR) scheme, known as the Australian Financial Complaints Authority (AFCA), to resolve disputes relating to financial services complaints. The establishment of AFCA means there will be a single scheme for all financial services and superannuation complaints. Currently there are three separate schemes: the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal.

AFCA will have higher monetary limits and compensation caps than the existing schemes. In addition, there will be an enhanced internal dispute resolution (IDR) framework to report IDR activities to AFCA in accordance with ASIC requirements.

AFCA will start accepting complaints no later than 1 November 2018. The operator of the scheme will be authorised by the Minister, and the scheme will be subject to ongoing oversight by ASIC. Members of FOS and CIO must continue to hold their EDR membership in the lead up to AFCA.

Further information can be found here.