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

I thank Senator Patrick for his contribution. AFCA will be required by law to be appropriately accessible to persons that have complaints against financial firms that are members of AFCA. All Australian financial services licensees will be required by condition of their licence to be a member of AFCA. AFCA will also be required under the legislation to resolve complaints in a way that is fair, efficient, timely and independent. ASIC will be given a broad new directions power to compel AFCA to comply with the mandatory requirements under this legislation. ASIC will also have a new legislative instrument-making power to ensure AFCA satisfies its legislative requirements, including the requirement to resolve complaints in a way that is fair, efficient, timely and independent.

AFCA's discretion to decline to hear a particular complaint will be appropriately limited by tightening the parameters for exercise of its discretion—that is, by requiring AFCA to set out the factors it will have regard to before exercising the discretion, including a requirement to provide written reasons where AFCA exercises the discretion, and including an internal review mechanism for those circumstances where AFCA exercises its discretion. In addition, the responsible minister, the Minister for Revenue and Financial Services, Minister O'Dwyer, will have regard to AFCA's proposed terms of reference when making the authorisation decision, and will be able to impose conditions on authorisation. The responsible minister, Minister O'Dwyer, will require AFCA's terms of reference to include a commitment to procedural fairness before she will authorise the scheme. Following authorisation, any material change to AFCA's terms of reference will require ASIC approval. These measures strike the right balance, we believe, between providing AFCA with the flexibility to refuse to hear a complaint when this is appropriate and ensuring that AFCA is accountable for the exercise of this discretion.

AFCA's decision-making approach in relation to non-superannuation complaints and as affirmed by the Ramsay review will adopt the approach currently taken by the Financial Ombudsman Service and the CIO. AFCA will make decisions based on what is fair in all circumstances. As a non-legal body, it is reasonable that AFCA should make decisions that are fair in all circumstances as opposed to decisions that, while adhering to the law, nonetheless result in unfair or very unreasonable outcomes for consumers.

There is also a legislative obligation on AFCA to ensure that it has the appropriate expertise to deal with complaints within its jurisdiction, and AFCA will be required to have an independent assessor and to have regard to the use of panels for complex complaints, and will also be subject to more frequent independent reviews, which can look at different aspects of AFCA's operations, including its decision-making processes. The government has also established a transition team led by Dr Malcolm Edey, former assistant governor with the RBA, for the establishment of AFCA. The consultation paper on AFCA's governance and funding arrangements has been released for stakeholder feedback.