Primary Producers, Small Business operators and millions of Australian consumers are the big winners this week with the passage of legislation this week to establish the Australian Financial Complaints Authority (AFCA).
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, and, says significantly more primary producers and small businesses will have access to free, fast and binding dispute resolution following the passage of the Treasury Laws Amendment with benefits for consumers as well.
Minister O’Dwyer says the new entity has one key role.
“AFCA will provide a one-stop shop to ensure a fair deal in resolving disputes with banks, insurers, super funds and small amount credit providers, without the expense, inconvenience, and trauma associated with going to court.”
The Legislation also increases access to redress by widening the range of disputes that AFCA will be able to hear.
The definition of a small business will be relaxed, so that any business with fewer than 100 staff can access AFCA;
- Small business primary production producers – defined in accordance with the Income Tax Assessment Act 1997 – will have access to compensation of up to $2 million for disputes about credit facilities of up to $5 million;
- The cap on income stream insurance product disputes will be increased from $8,300 to $13,400 per month;
- The cap on uninsured third-party motor vehicle claims will increase from $5,000 to $15,000; and
- The separate compensation cap for general insurance broker disputes will be increased from $174,000 to $250,000.
Minister for Small and Family Business, Craig Laundy has also welcomed the moves.
“I am pleased to say that primary producers and small businesses will overwhelmingly benefit from the new AFCA scheme, with significant increases in the compensation available and a more flexible definition of a small business.”
AFCA will start receiving disputes from no later than 1 November 2018. To achieve a smooth transition, the Government is seeking a proposal for a not-for- profit company to operate the AFCA scheme to be lodged with Treasury by 15 March 2018.
A proposal will need to demonstrate how the scheme will meet the requirements for authorisation set out in the legislation — to provide a fair, independent, accessible, accountable, efficient and effective dispute resolution service for consumers and the financial services industry.