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Thursday 31 May 2018

18-158MR ASIC gives disclosure relief during transition to AFCA

ASIC has announced it will give financial firms, including superannuation trustees, transitional relief until 1 July 2019 to allow them time to update mandatory disclosure documents and periodic statements with the contact details of the Australian Financial Complaints Authority (AFCA). 

AFCA is the new single external dispute resolution (EDR) scheme for consumer and small business complaints.

A range of measures has been put in place to ensure that consumers are kept informed of how and where to pursue a complaint during the transition to AFCA, which will start dealing with complaints about all financial firms from 1 November 2018. These include that:

AFCA has a new website and new contact details;

  • prior to AFCA’s commencement the final response letters that financial firms send to complainants who have been through internal dispute resolution will include AFCA’s details;
  • arrangements are being made to effectively re-direct consumers from the predecessor dispute resolution schemes to AFCA from 1 November 2018; and
  • ASIC will require financial firms’ broader consumer communications about how to complain (e.g. including on websites) to also be updated with AFCA’s details by 1 November 2018. 

Under the disclosure relief provided by ASIC:

  • Financial firms will have until 1 July 2019 to update EDR details to refer to AFCA in mandatory disclosure documents, periodic statements and exit statements; and
  • Financial firms will not have to issue significant event notifications under s1017B of the Corporations Act associated with the transition to AFCA.
  • Regulatory Guide 165 Licensing: Internal and external dispute resolution (RG 165) has also been amended to require information about predecessor schemes and AFCA to be provided to complainants from 21 September 2018.

ASIC will continue to work with all EDR scheme stakeholders to ensure that the transition to AFCA is as smooth as possible for both financial firms and consumers. 

Background

AFCA, the new single financial services EDR scheme will commence on 1 November 2018.  It will replace the three existing schemes: the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT). 

ASIC sought feedback on financial firms’ EDR disclosure obligations in Consultation Paper 298: Oversight of the Australian Financial Complaints Authority: Update to RG 139 released on 5 March 2018. 

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Financial firms who wish to rely on the disclosure relief will need to review both the legislative instruments and the updated text in the box under RG 165.88.

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Last updated: 31/05/2018 11:22