AFCA embraces rule on naming non-compliant firms

The Australian Financial Complaints Authority (AFCA) intends utilising its new-found ability to publicly name firms which fail to comply with its determinations but will give them the opportunity to provide an explanation.

AFCA has published its responses to a consultation around rule changes granted by the Australian Securities and Investments Commission and acknowledged that some financial firms had expressed concern about potential reputational risks for smaller firms.

AFCA also acknowledged concerns from some stakeholders that there was a perception it is “assuming a regulatory role”.

However, AFCA said it was proceeding with the new rule as draft because “we consider this change as consistent with our accountability obligations to all stakeholders and the public”.

“The Operational Guidelines explain the process and we confirm that Financial Firms will be notified and given an opportunity to respond to a claim that they have not complied with a Determination prior to publication,” it said.

AFCA noted that the Operational Guidelines also give examples of when it is likely to publish a Financial Firm’s non-compliance with a Determination and noted that “these examples are of situations where the Financial Firm is clear that they are refusing to comply with the Determination”.

AFCA said it also plans to publish guidance about how it assesses compliance with a Determination.

It also said that it is yet to determine the frequency of public reporting about Financial Firm non-compliance with Determinations and would be engaging with ASIC in relation to the matter.

AFCA noted that the updated Rules and accompanying Operational Guidelines will come into effect from 12 March, next year,