Fair play: AFCA to make some adjustments after positive start – Analysis – Insurance News

The Australian Financial Complaints Authority (AFCA) received a generally positive track record after its first review of the Treasury, with recommendations to refine it and keep it on track rather than requiring major changes.

The critical question posed in the review was whether AFCA is fulfilling its role in a fair, efficient, timely and independent manner. Extensive consultation was undertaken and many questions were raised.

“It is not surprising that some respondents were unhappy with AFCA’s decisions when the outcome was not in their favor,” the review said.

However, when assessed against the parameters of fairness, independence and efficiency, the review found no evidence of systemic failures or underperformance of AFCA.

Fairness of results was the most common issue in “a large number of bids from a wide range of financial firms”, with inconsistencies reported and some objections to being held to a different standard than required by law or the contracts.

The review indicates that the AFCA has established an equity plan to provide more certainty and has other initiatives underway, while noting that the ombudsman “must exercise caution in applying his jurisdiction in equity ”.

The related recommendation simply says that “in making its decisions, AFCA should consider what is” fair in all the circumstances “taking into account primarily the four factors identified in its rules – legal principles, industry codes, good practices. of industry and previous decisions “.

The independence of rulings has been examined in contexts including a court case last year, DH Flinders Pty Ltd v AFCA, where a plaintiff was helped to identify a different company regarding a complaint rather than the one originally named.

“Although questions regarding the independence of AFCA are raised in the case, the review did not find any evidence to support the view that there are systemic issues with the independence of the operations of the ‘AFCA. “

AFCA has established an internal working group to review its processes and guidance for assisting people with complaints, the review said.

The report recommends that AFCA “should not advocate, or act in a way that would otherwise benefit, any party so that the impartiality of the complaint resolution process is compromised.”

The Treasury review process involved bilateral meetings and roundtables and commentary from small businesses, financial firms, and industry associations. consumer advocates and government organizations. It received 167 submissions.

Australia’s Small Business and Family Ownership Ombudsman argued that there was a strong case to extend jurisdiction over money and insurance products to small businesses, while consumer groups said the $ 5,400 cap for compensation for non-financial losses was far too low.

The review rejected the change, saying AFCA should continue to collect data on decisions to award compensation for non-financial losses in order to “help inform future consideration of this issue.”

“We were disappointed with the recommendation not to increase the limits on non-financial losses, but we agree with the report’s overall conclusion that, overall, AFCA is performing well,” said Cat Newton. , policy manager at the Consumer Action Law Center.NEW.com.au.

“We and other consumer groups look forward to discussing the review with AFCA so that it continues to improve and provide effective access to justice, especially for those in vulnerable situations. “

In addressing other issues, the Treasury recommends that AFCA provide more information on the speed of decisions and make proposals on the handling and transparency of systemic issues.

The funding model should not deter financial firms from defending complaints they consider unfounded, and it should take better account of the situation of small financial firms, he said.

The review says the ombudsman should provide consultation on approach documents, and it suggests that AFCA can change its rules to exclude certain paid lawyers for misconduct that is detrimental to the process.

“The overall conclusion of the review is that AFCA is performing well in a challenging operating environment and a changing regulatory landscape,” the review states.

“While this is an endorsement of its performance in its inception phase, AFCA will need to continue to develop and improve its processes as it consolidates its place in the financial system. “

The review report suggests that AFCA has had a generally smooth transition from the model that existed before it opened.

The Treasury report is available here.

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