Most financial firms will pay the same or less fees to the Australian Financial Complaints Authority (AFCA) under a new model.
Following an extensive consultation process with peak bodies and members, AFCA has confirmed its “new, user-pays” model which will be introduced from 1 July.
Under the new model, which includes a single registration fee, around 90 per cent of members of the national ombudsman scheme will see a positive or neutral impact on total fees, while the remaining 10 per cent are expected to see an increase in costs which AFCA said “this more accurately and fairly reflects their usage”.
Meanwhile, the superannuation levy has also been scrapped, which means super funds will come under the same fee structure as members. AFCA noted that super fund trustee members will likely see a positive or neutral impact on fees.
About 95 per cent of licensed financial firm members of AFCA’s external dispute resolution scheme will pay only their annual registration fee, which has been set at $375.55 for the coming financial year.
All members also qualify for five free complaints a year.
“This is a fair, transparent and equitable funding model,” AFCA chief ombudsman and CEO, David Locke said.
“Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”
Mr Locke said that AFCA will continue to monitor the new model over the coming year and will continue to work with firms and peak bodies to reduce and resolve complaints.
“Our user-pays approach incentivises firms to use internal dispute resolution to decrease complaints to AFCA,” he said.
“At AFCA, we believe our role isn’t just to resolve complaints escalated to us but also to play a preventative role.”
The news comes after a number of advice industry stakeholders backed AFCA’s model, including the Financial Planning Association of Australia (FPA) who said that it would significantly reduce the cost for its members in managing external complaints.
An independent review of AFCA last year recommended that the funding model better take into account the circumstances of smaller firms with improved transparency surrounding fees and how they are being used.
Is that 5 complaints per Licensee, or per Corporate AR?
Too late for me. As a limited licensee I complained every year that the fees I paid were not commensurate with the level of services/scope I could provider. Thus fee income would be quite different to a full planner. I applied year in and year out for a reduction and every year I have been denied. As a consequence, I determined to exit last year. I still had to pay almost a full fee as I was busy with Covid Tax work (jobkeeper funding and the like) when I cancelled. ASIC showed no mercy at all. No fee concessions. The extra hours that most tax agents worked during Covid to help support struggling businesses were not rewarded. Especially for those states with longer lock-downs and additional government assistance. Most of this was funded through the taxation system.
I actually think ASIC or the Ombudsman should review this and reimburse. Much like the banks are now doing. Refunding fees they charged for NO service. That is certainly what I felt like dealing with ASIC all those years.
Five free complaints a year? For $375? oh…
“All members also qualify for five free complaints a year.” Are they serious? Do we also get a set of streak knives with each complaint…
I thought that this would be a good idea but after reading that the FPA approves I became worried. Since when have the FPA been worried about their members?
Looks like their members numbers are declining so they actually have to do some work for the remaining members now…