Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

The government has actually made that point very clear throughout the debate. The government is acting on the independent advice of the expert Ramsay review panel. The Ramsay review recommended an industry dispute resolution scheme as a more flexible and effective model than a tribunal. The overwhelming majority of submissions to the Ramsay review expressed concerns that a statutory tribunal would be legalistic, inflexible and costly, delivering worse outcomes for consumers. Key consumer groups, including the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia, have indicated that their primary position remains that the best framework for dispute resolution in the financial system is a single industry ombudsman scheme for all disputes, including superannuation disputes. The government's approach will establish a one-stop shop that meets all of the criteria that proponents of a banking tribunal are calling for. AFCA will result in disputes being resolved fairly and efficiently in a less legalistic forum than a court, with access to compensation where consumers have wrongfully suffered a loss and decisions that are binding on financial firms.

All financial firms will be required to be members of AFCA by law, and decisions made by AFCA will be binding on them. If a financial firm fails to comply with an AFCA determination, AFCA can expel the firm, which would mean the firm would be in breach of its licence conditions. AFCA will be more flexible. Its terms of reference, rather than legislation, will set out, for example, the kinds of disputes it can hear, the remedies it can provide and the techniques it can use to resolve disputes. The flexibility will allow it to address new emerging issues—for example, cases involving the use of non-monetary covenants have been prominent in the debate over industry conduct. The Australian Small Business and Family Enterprise Ombudsman's report on small business loans recommended that banks be restricted from defaulting a loan under $5 million for any reason where a small business has complied with the loan payment requirement and acted lawfully.