The National Insurance Brokers Association (NIBA) has opposed legislation allowing the Financial Ombudsman Service (FOS) to be absorbed into a wider complaints authority.

“NIBA firmly submits that the bill should not be passed in its present form and at this point in time,” it says in a submission to the Senate Economics Legislation Committee.

“We believe FOS is providing an important service to clients of insurance brokers, which has developed over the years and is working well.”

FOS, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal are to be rolled into the Australian Financial Complaints Authority (AFCA) from next July.

But NIBA says the new authority’s terms of reference have not been resolved and its jurisdiction in relation to broking is unclear.

It also says it is inappropriate for AFCA to be subject to regulatory requirements issued by the Australian Securities and Investments Commission.

“No government agency has the power to give directions relating to the jurisdiction and operations of any courts of Australia, and AFCA should be in no different position.”

NIBA opposes any move to let the authority make compensation awards as high as $500,000, given there is no capacity to have the decision reviewed by an external judicial process, including on a point of law.

“It is not at all clear that clients of insurance brokers will be in a better position once AFCA is implemented,” it says.

The Federal Government in August appointed a four-person expert reference panel to assist the transition team overseeing the switch to the new authority.