Industry body questions AFCA funding model

Funding of the newly established Australian Financial Complaints Authority must be fairly distributed across the financial services industry to reflect the accountability of each sector.

In its submission to the Senate Standing Committee on Economics, the Australian Institute of Superannuation Trustees will argue that the funding model for the authority, which is due to hear complaints from organisations across the entire finance sector from 2018, should reflect the reality that there are fewer superannuation complaints than non-superannuation complaints.

To illustrate their point, the AIST made reference to the number of complaints received by the Financial Ombudsman Service in 2015-2016 - 34,095, mostly regarding financial advice - and compared them to the number complaints received by the Superannuation Complaints Tribunal which reached 2368.

"Figures such as these highlight the risk of inappropriate cross-subsidisation if the funding model is not developed appropriately and does not account for differences between sectors," the AIST said.

"Our submission notes that as each sector of the finance industry will be required to fund AFCA it is important that each does not pay more than their fair share."

The AIST will also raise concerns about appeal rights in the new body, calling out how under the Bill, parties to a complaint will not have the right to seek judicial review.

"We believe this leaves scheme participants worse off under the new system and therefore a right similar to judicial review should be retained," the AIST said.

"In an environment where Australians are compelled by legislation to contribute a substantial percentage of their income into superannuation accounts and decisions relating to those accounts have potentially life changing impacts, appeal rights are important."

AIST says the profit-to-member super sector must be consulted on AFCA's ongoing funding, the funding arrangements during the transition, and the authority's terms of reference.

Read more: AISTSuperannuationAFCAAustralian Financial Complaints AuthorityAustralian Institute of Superannuation TrusteesFinancial comaplintsSCTSuperannuation Complaints Tribunal
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