AFCA looks to expand jurisdiction over receiving banks in scams

The Australian Financial Complaints Authority (AFCA) is opening public consultation on a string of governance changes, with a key focus on expanding its jurisdiction to include receiving banks in scam complaints.

Following an engagement with an external consultant, AFCA has proposed to introduce the ability to name uncomplying financial firms; require the use of approved communication channels; cease interactions with paid representatives who are not AFCA members; and the removal of AFCA's legacy Rules section, where the legacy jurisdiction has already closed at the end of June 2020.

The key consideration among the changes include the consideration of a receiving bank in a scam transaction, which will allow the ombudsman to meet its new authorisation condition that "enables AFCA to investigate and consider scams involving mule accounts and the actions of receiving banks in scam complaints."

The change will supposedly provide greater fairness, transparency and accountability in dealing with scam complaints, AFCA said.

"This amendment is a significant step forward in ensuring that all parties involved in the movement of scam funds are subject to appropriate scrutiny," said deputy chief ombudsman June Smith.

Smith said the annual review is essential to providing clear guidance on AFCA's obligations.

"Engaging with stakeholders through the consultation is vital for refining our processes and ensuring we meet the evolving needs of consumers, small business and financial firms," Smith said.

"We look forward to receiving valuable feedback that will help us enhance the AFCA scheme."

The consultation is currently running until June 13.

Meanwhile, the ombudsman is ceasing membership certifications from FY26.

After consultations and support from ASIC and related parties, AFCA will stop issuing membership certificates, flagging the decision was made to combat fraudulent use of the certificate and reduce administrative burden on the organisation.

The accreditation change will also provide consumers with "greater confidence" around the membership status of a financial firm.

Members will stop receiving a membership certificate following a payment of their annual fee for the 2025-2026 financial year, which will be invoiced from the end of May.

Instead of certificates, members can use the financial firm search on AFCA's website to confirm a membership. AFCA said it provides real-time, accurate information and will become the primary tool to verify a membership.

The financial firm search will also be applicable for authorised credit representatives (ACRs).

Members can confirm they have paid their fees by checking the member portal in the 'Invoice' section or request a receipt when paying by Westpac PayWay.

For those that still require a certificate for other uses, AFCA said it is "engaging closely with industry and have asked them to update their processes in line with this change."