The Revenue and Financial Services Minister today welcomed a consultation paper on the terms of reference, governance and funding arrangements for the Australian Financial Complaints Authority (AFCA).
AFCA, expected to operate as of 1 July 2018, is a free, fast and binding dispute resolution service for consumers and small businesses.
"AFCA is a landmark reform that will overhaul how financial disputes are dealt with in Australia," Minister for Revenue and Financial Services Kelly O'Dwyer said.
One key aspect the paper outlines is monetary limits, which sets a dispute limit of $1 million and a $500,000 compensation cap for most non-superannuation disputes, and an unlimited amount for superannuation disputes.
"For small business credit facility disputes, where a small business credit facility is of an amount up to $5 million, AFCA should have a compensation cap of $1 million," the paper noted.
Treasurer Scott Morrison set in motion the establishment of a one-stop-shop dispute body to replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal in presenting this year's budget.
Following the Ramsay Review, having multiple external dispute resolution schemes with overlapping jurisdictions found it to be difficult to achieve comparable outcomes for consumers with similar complaints.
In July, O'Dwyer appointed a transition team led by Malcolm Edey to facilitate the merger of the three separate bodies. The panel comprises representatives from two of the three existing complaints services to be amalgamated as well as two representatives acting on behalf of small businesses and consumers respectively.
Edey is consulting with the industry until November 20 on any other issues that are not yet settled.
"I encourage all interested parties to engage with Dr Edey and the Transition Team to ensure that AFCA provides enhanced access to redress, while being accountable and transparent to both industry and consumers," O'Dwyer added.