Canberra lifts AFCA payout caps
Brokers have had the compensation cap for disputes raised from $174,000 to $250,000 by the new Australian Financial Complaints Authority (AFCA).
The Federal Government’s financial services super-ombudsman will start handling disputes no later than November 1, and its scope around insurance-related cases has been widened.
Apart from the compensation cap for general insurance broker disputes being raised to $250,000, the AFCA transition team has decided the cap on uninsured third party motor vehicle claims increases will rise from from $5000 to $15,000 and the cap on income stream insurance product disputes from $8300 to $13,400 per month.
“AFCA will provide a one-stop shop to ensure consumers get 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,” Minister for Revenue and Financial Services Kelly O’Dwyer said.
The Government is seeking a proposal for a non-profit company to run the scheme, and the closing date for submissions is March 15.
Proposals must show how the scheme will meet the authorisation set out in the legislation, which is to provide a fair, independent, accessible, accountable, efficient and effective dispute resolution service for consumers and the financial services industry.
The Australian Securities and Investments Commission will retain direct oversight of the Financial Ombudsman Service and Credit and Investments Ombudsman in the interim.
The Insurance Council of Australia has welcomed AFCA, calling it a win for all.
CEO Rob Whelan says a “service that seeks to resolves disputes in a timely, efficient manner is a positive move towards consumer and small business protection”.
Financial Ombudsman Service Chief Ombudsman Shane Tregillis says AFCA will “simplify, strengthen and increase access to free external dispute resolution”.