AFCA wants to name non-compliant firms

The Australian Financial Complaints Authority (AFCA) has canvassed being given the ability to name financial firms that do not comply with its determinations, as part of a changes aimed at dealing with financial scams.

AFCA claims publishing the information increases transparency and “assists in ensuring financial firms meet their obligations to comply with a determination, after it has been accepted by a consumer.

The proposal has been outlined by AFCA as part of a consultation it has initiated around expanding its jurisdiction over banks which receive funds as a result of scams.

The consultation was opened yesterday and runs to 13 June, with AFCA saying it follows a recent change to its authorisation conditions by the Fedeal Government.

“The amendments seek to improve the effectiveness and efficiency of complaint handling, improve transparency and lift industry standards, particularly in relation to scams,” it said.

“A central feature of the proposed changes is the inclusion of receiving banks in AFCA’s jurisdiction when assessing complaints involving scam transactions. This change enables AFCA to investigate the actions of financial institutions that receive funds from scam victims, including the use of mule accounts.”

AFCA deputy chief ombudsman, Dr June Smith said the authority conducted an annual review of its Rules to ensure they remain accurate and up to date.

Engaging with stakeholders through the consultation is vital for refining our processes and ensuring we meet the evolving needs of consumers, small business and financial firms. We look forward to receiving valuable feedback that will help us enhance the AFCA scheme.”

Summary of proposed changes

AFCA proposes changes to its Rules in the following areas:

• Consideration of a receiving bank in a scam transaction. This change will allow AFCA to meet its new authorisation condition that was issued by the Minister for Financial Services. That condition enables AFCA to investigate and consider scams involving mule accounts and the actions of receiving banks in scam complaints. This change provides greater fairness, transparency and accountability in dealing with scam complaints.
• Introducing the ability for AFCA to name financial firms who do not comply with Determinations. Publishing this information increases transparency and assists in ensuring financial firms meet their obligations to comply with a determination, after it’s been accepted by a consumer.
• Requiring the use of appropriate communication channels by paid representatives. This change will ensure paid representatives use the communication channel required by AFCA, including our consumer portal, when submitting complaints and communicating with us about complaints. Handling these complaints through the most appropriate channel will provide for much more efficient and effective complaint handling.
• Dealing with paid representatives who are not AFCA members. This proposed change would extend an existing Rule, giving AFCA a further discretion to cease dealing with a complaint where a paid representative is required to be an AFCA member but is not. This will provide important protection for complainants who have engaged a paid representative but are unhappy with the service they provided and wish to make a complaint.
• Removal of AFCA’s legacy Rules section. AFCA’s legacy jurisdiction has already closed at the end of June 2020, so we propose to remove this section from our Rules. Any open legacy complaints will not be impacted.