The Australian Securities and Investment Commission (ASIC) has initiated the process to create a new regulatory body to be called as Australian Financial Complaints Authority (AFCA) after the bill was passed in Australia’s parliament in February 14th, 2018. According to Minister for Financial Services, the Hon. Kelly O’Dwyer has said, that the new regulator will be in action from November 2018. The new body will look into the complaints and dispute resolution for the Australian Financial Industry.
The regulator, ASIC has issued a public draft Regulatory Guide 139, Oversight of AFCA for public consultations on Monday for a 5-week period till April 6th. Creating a new regulatory body requires a number of transitional steps including that the Finance Ministry should authorise AFCA to commence operations and the AFCA Board will consult on the scheme’s terms of reference with which it will operate. ASIC is ensuring a smooth transition to AFCA, therefore providing all the stakeholders including companies and the public with much possible information.
ASIC Deputy Chairman Peter Kell commented on the updated draft guidelines: “ASIC is issuing draft updated RG 139 now as we believe that clarity about ASIC’s policy approach at this stage of the transition will assist all stakeholders. It will also enable ASIC to take into account and respond to any emerging issues that arise during the transition period.” Further added: “Updated RG 139 retains many longstanding policy settings that were considered by the Ramsay Review and endorsed by Government, including the handling of systemic issues and periodic independent scheme reviews. It also aligns with the new legislative requirements in the AFCA Act.”
ASIC has been working closely with brokers to solve some of the most contentious issues and brokers feel that ignoring them can make clients taking undue advantage of the regulation. One such regulation mandates that the brokers will be responsible for handling any costs associated with the complaints by the clients regardless of whether or not there is the validity of such claims. Brokers make a valid point that its out of their hand or control if a person decides to file complaints without relevance to its legitimacy.
Creation of AFCA will ease up some of the time and resource consuming process that has been impacting ASIC, and also ASIC was handling a large number of financial regulatory responsibilities.