Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It's a pleasure to stand in this place and speak on the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017, which the Minister for Revenue and Financial Services has put before the House.

I am pleased to say that the particular framework that has been created through this bill is something that I've had a number of discussions with the minister about. I think it's an enormous step in the right direction in terms of providing a robust complaints resolution system for when there are problems. Sadly, the current system has shown its failings, or its shortcomings, in dealing with some of the more egregious examples of bank misbehaviour over the past few years. I think this bill is a practical and much-needed improvement for consumers. An important addition is small business, and providing access to free, fast and binding financial dispute resolution. I think that that is a key component of this bill—that the decisions coming out of this body will be binding resolutions to matters.

The bill enacts the government's commitment to deliver on the recommendations of the independent review of external dispute resolutions, commonly known as the Ramsay review. I want to give the minister due credit for pursuing this course of action to establish this tribunal to deal with these issues. As I said, I had a number of discussions with the minister on this particular type of model, and I fully support, therefore, what this bill is trying to achieve, because I think it creates a one-stop shop, to resolve these issues where there are these complaints. We've seen, for example, the situation where the Superannuation Complaints Tribunal had taken an average of almost 800 days to resolve consumer complaints. That is nowhere near good enough, in anybody's book—that somebody has to wait nearly 800 days, on average, to have a complaint resolved. The bill addresses these issues with the creation of this new one-stop external dispute resolution body called the Australian Financial Complaints Authority. It will replace FOS, the CIO and the SCT and bring them all into one organisation. It will commence from 1 July 2018, from which time all new complaints will be dealt with by the new body.

The new Australian Financial Complaints Authority, as I've touched on already, will reduce confusion as it will handle all financial complaints. One of the things we heard frequently was that when people had an issue with financial services it wasn't clear who they should go to, to make a complaint and try to have that complaint resolved. That's what this body will do. By having a one-stop-stop that includes superannuation complaints, managing the complaints will be a smoother and more professional process.

Importantly, this is about creating a body that will provide resolution for consumers of their concerns. It is true that the banks and the financial services organisations over the years have let themselves down, and they do need to be held accountable for their shortfalls, but this is where people will have the opportunity to raise those complaints and those concerns. Importantly, the new authority will also be able to hear higher value complaints and award higher amounts of compensation, increasing access to redress for consumers and small business.

The key element of the new one-stop shop is that it is a single new external dispute resolution body to handle all financial disputes, authorised by the Minister for Revenue and Financial Services. The scheme will be industry funded, which will allow flexibility to increase funding in response to unforeseen increases in complaint volumes. The authority will be governed by a board, comprising an independent chair and an equal number of directors with consumer and industry backgrounds. At the establishment of the authority, the minister will appoint the chair and a minority of board members. The authority will be able to hear disputes of up to $1 million and be able to award compensation of up to $500,000. Consumers and small business will be able to bring a complaint about a credit facility where the facility is for an amount of up to $5 million, and they may be awarded compensation of up to $1 million. There is an unlimited monetary jurisdiction being maintained for all superannuation disputes.

I think it is worth looking at the history of how we got to the point of needing to change current arrangements. I've probably touched on some of that already, but it's worth looking at a broader review. The Ramsay review found that the current dispute resolution framework was the product of history rather than design. It found that having multiple schemes with overlapping jurisdictions means it's difficult to achieve comparable outcomes for consumers with similar complaints, and more difficult for consumers to progress disputes involving firms that are members of different schemes. This, as I touched on earlier, increases the risk of confusion for consumers.

Also, we've seen that the current monetary limits for FOS and the CIO are no longer fit for purpose and are preventing access for many individuals and small business to the complaints resolution processes of FOS and the CIO. The current monetary limit of $500,000 and the compensation cap of $309,000 bear little relationship to the value of most financial products—for example, residential mortgages, a range of insurance policies and even some investments. There are fundamental problems with dispute resolution arrangements for superannuation, which I've touched upon before, with the enormous backlog at the Superannuation Complaints Tribunal.

There has been support from the industry for the creation of this authority. Gerard Brody, the CEO of the Consumer Law Action Centre, stated:

Australians need one, high quality service to resolve their disputes against financial institutions quickly and fairly. The one-stop shop … is a sensible move that can help Australians get justice.

Choice has also welcomed the announcement, which will provide consumers with this single, one-stop shop. The authority will also assist with small business. The Council of Small Business of Australia noted:

… this new Authority will provide business owners with a clear mechanism to seek redress where they have been unfairly done by.

Consumers will benefit from the new framework through the ability of the authority to have flexibility in dealing with complaints in a timely manner and to have direct control over its funding and processes. This is envisaged to deliver practical improvements to consumers and small business. At the end of the day, that's what we're interested in. We're interested in seeking a model that is going to assist consumers and small businesses to have their disputes resolved in a timely and efficient manner. Consumers will be able to approach the authority to resolve all financial complaints, eliminating, as I touched on before, the uncertainty and the confusion. Where complaints cover multiple providers within the financial system, these complaints will now be able to be handled by the one authority.

The bill also introduces a new internal dispute resolution reporting regime to provide firms with an incentive to have best practice for internal dispute resolution. It is disappointing that, at a time when our financial services organisations are well aware of their corporate responsibility, their internal dispute resolution systems are not able to resolve these complaints and we need to proceed to an external dispute resolution process. But this new internal dispute resolution reporting regime is designed to ensure that financial systems firms do have first-class internal dispute resolution processes. I would hope, through that process, and improving their internal dispute resolution process, that the need for complaints to be referred to the authority and to an external dispute resolution process is minimised.

The establishment of this authority—the powers it has, the opportunities it will provide, the flexibility it has, the increased financial limits that will apply, and consumers and small businesses knowing they can go to one place to have their concerns heard and dealt with—will be of tremendous benefit to consumers and small business. I would like to thank the minister for her willingness to discuss this over the past 12 months or so and to be open to discussing various ideas. I commend this bill to this House.

See this speech in context