Businesses failing to co-operate with the Australian Financial Complaints Authority (AFCA) may face civil penalties under regulatory changes made by the Federal Government.

“A strong economy requires a strong, accountable financial sector that Australians can trust,” Treasurer Josh Frydenberg said today.

The regulation acts on a Hayne royal commission recommendation for financial services licensees to be required to take reasonable steps to co-operate with AFCA, particularly by making available all relevant documents and records.

“There is little benefit in mandating the existence of systems if there is no obligation to comply with those systems,” Commissioner Kenneth Hayne said.

The Government has also regulated to address “legacy unpaid” rulings from the Financial Ombudsman Service and the Credit and Investments Ombudsman, since absorbed into AFCA.

“Consumers and small businesses that have been harmed by misconduct and received determinations in their favour will receive up to $30 million in compensation owed to them by bankrupt financial firms that they never would have received otherwise,” Mr Frydenberg said.

The Government is working with agencies to ensure payments start over the coming weeks.