New AFCA funding model to kick off in July
The financial services ombudsman has finalised its new funding model following industry consultation.
Most financial firms will pay the same or less fees to the Australian Financial Complaints Authority (AFCA) under a new model.
Following an extensive consultation process with peak bodies and members, AFCA has confirmed its “new, user-pays” model which will be introduced from 1 July.
Under the new model, which includes a single registration fee, around 90 per cent of members of the national ombudsman scheme will see a positive or neutral impact on total fees, while the remaining 10 per cent are expected to see an increase in costs which AFCA said “this more accurately and fairly reflects their usage”.
Meanwhile, the superannuation levy has also been scrapped, which means super funds will come under the same fee structure as members. AFCA noted that super fund trustee members will likely see a positive or neutral impact on fees.
About 95 per cent of licensed financial firm members of AFCA’s external dispute resolution scheme will pay only their annual registration fee, which has been set at $375.55 for the coming financial year.
All members also qualify for five free complaints a year.
“This is a fair, transparent and equitable funding model,” AFCA chief ombudsman and CEO, David Locke said.
“Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”
Mr Locke said that AFCA will continue to monitor the new model over the coming year and will continue to work with firms and peak bodies to reduce and resolve complaints.
“Our user-pays approach incentivises firms to use internal dispute resolution to decrease complaints to AFCA,” he said.
“At AFCA, we believe our role isn’t just to resolve complaints escalated to us but also to play a preventative role.”
The news comes after a number of advice industry stakeholders backed AFCA’s model, including the Financial Planning Association of Australia (FPA) who said that it would significantly reduce the cost for its members in managing external complaints.
An independent review of AFCA last year recommended that the funding model better take into account the circumstances of smaller firms with improved transparency surrounding fees and how they are being used.
