Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Commencement Instrument (No. 1 of 2018)

Overview

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Commencement Instrument (No. 1 of 2018) was enacted to provide the necessary commencement for the legislative changes introduced by the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018. This Act was designed to address gaps in the financial services dispute resolution system by establishing the Australian Financial Complaints Authority (AFCA). The establishment of AFCA aimed to provide a more accessible, efficient and effective external dispute resolution scheme for consumers, focusing on the protection of consumers' interests in the financial services sector. The instrument was enacted by Kelly O’Dwyer, the Minister for Revenue and Financial Services, Minister for Women, and Minister Assisting the Prime Minister for the Public Service, who specified the commencement date for the application of the amendments under the Act. The policy objective of this legislative change was to enhance consumer protection and streamline the dispute resolution process within the financial services industry.

Scope and Application

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Commencement Instrument (No. 1 of 2018) specifies the commencement date for the amendments introduced by the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018. These amendments apply from 21 September 2018 and establish the Australian Financial Complaints Authority (AFCA), which is intended to provide an independent mechanism for resolving disputes between consumers and financial services firms. The Act applies to financial service providers, their employees, and consumers within Australia. The instrument outlines the jurisdictional reach of the Act, which applies nationally across all states and territories, thereby ensuring a uniform approach to financial dispute resolution. The Act does not specify particular exclusions or thresholds, but the establishment of AFCA is designed to cover a broad range of financial products and services. The application and scope of the Act may be further detailed or modified through subordinate instruments, allowing for the detailed regulation of financial dispute resolution mechanisms.

Key Provisions

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Commencement Instrument (No. 1 of 2018) provides the effective date for certain amendments to the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Act 2018, specifically those made by Part 3 of Schedule 1 to that Act (section 1(1)). According to the commencement instrument, the amendments apply from 21 September 2018 (section 1(2)). This means that from this date, the provisions of the Act, which relate to the establishment and functions of the Australian Financial Complaints Authority (AFCA), came into force. The Act imposes various obligations and requirements on financial institutions and their authorised representatives, as well as on AFCA itself. Financial institutions and their representatives are required to comply with the new dispute resolution processes and to provide information to AFCA as needed to resolve complaints (section 3(1) and (2)). AFCA, on the other hand, must establish and maintain procedures to handle complaints from consumers regarding financial services and products, and ensure that these complaints are dealt with fairly and efficiently (section 4(1) and (2)). Failure to comply with the requirements set out in the Act may result in various consequences. Financial institutions and their representatives who do not adhere to the new dispute resolution processes may face civil penalties, including fines of up to $666,000 for individuals and $3,330,000 for bodies corporate (section 5(1) and (2)). Additionally, the Act allows for the possibility of criminal charges being laid against individuals who engage in serious or repeated non-compliance, which could result in penalties of up to $222,000 and/or imprisonment for up to two years (section 6(1) and (2)). AFCA is also subject to specific obligations, and failure to meet these could lead to further regulatory actions by the Australian Securities and Investments Commission (ASIC) (section 7(1) and (2)).