The small-business desk at AFCA is encouraging firms with financial complaints to give them a ring, even if they are unsure whether they’re eligible for compensation or not.
More than 2,100 businesses have made complaints to the recently minted Australian Financial Complaints Authority since it opened a little over six months ago.
Geoff Browne, the body’s first lead small-business ombudsman, has his hands full and is preparing for another influx of complaints from July 1, when an expanded remit, covering cases dating back to 2008, comes into effect.
This week, corporate regulator ASIC approved a rule change enabling the body to hear complaints dating back to more than a decade ago, after the federal government outlined compensation as a priority in the wake of the banking royal commission.
AFCA was set up during the royal commission process as a “one stop shop” for financial complaints. It is now the primary body dealing with gripes under the 2019 Banking Code of Practice, the Australian Banking Association (ABA) code of conduct that regulates most small business lending.
With ASIC’s tick of approval secured, businesses with less than 100 workers and with disputes involving credit facilities of $5 million or less will now be eligible to make legacy financial complaints as small businesses.
There is up to $1 million in compensation available for successful claimants, or $2 million for primary producers.
Not sure? Give AFCA a ring anyway
But, speaking to SmartCompany, Browne says businesses unsure about whether they have a case, or are even eligible, should still give AFCA a ring.
“If you think you have a basis for a complaint with a financial firm that hasn’t been dealt with, you are better off lodging a complaint,” he explains.
Browne, a former small-business commissioner, stepped into his role at AFCA back in February after the authority identified the need for a dedicated small-business voice in its ranks.
While so far the volume of complaints made aren’t significantly higher than under predecessor schemes, he says there’s been plenty of work.
“It’s a bit of a challenge. With the volumes we’re seeing we’ve got more than enough to keep us busy.”
Browne explains AFCA has been bringing on and training new staff in anticipation of July 1, as industry advocates begin sounding the compo horn.
Small-business ombudsman Kate Carnell yesterday welcomed news of an extended complaints remit.
“This is a positive step forward for small businesses who have fallen victim to financial misconduct,” she said in a statement.
Businesses being left out in the cold?
However, Carnell is also worried AFCA’s $5 million cap will leave some firms out in the cold.
“It is unfortunate that AFCA is bound by the $5 million limit as we know of a range of cases where the small business loan was over this amount and those businesses have nowhere to go — no access to justice,” Carnell said.
“These businesses don’t have the resources to take financial misconduct to court and they deserve justice too.”
Browne says if AFCA encountered a claim outside of its jurisdiction it would try to resolve the matter the best it could, but added that the authority needs to stick to its remit.
Remit needs to be extended?
Lawyer Dan Creevey has also been critical of the $5 million cap, amid a growing swell of support for further extending AFCA’s horizons.
Because AFCA replaces the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal, businesses with credit facilities exceeding $5 million are now “worse off”, Creevey argues.
“We have raised this matter with the Department of Treasury, which is dealing with this area of post-Hayne reforms, and they have advised they are considering whether and how they will deal with this gap,” Creevey said in a statement circulated earlier this week.
“Our view is that, as a matter of common sense, it would be inconsistent to not implement an extension of the normal six-year limitation period similar to the extensions of time in relation to credit facilities under $5 million under the AFCA.
“Aggrieved businesses and farmers with facilities over $5 million are likely to have suffered greater losses. They may well now be in a worse financial position than parties with credit facilities under $5 million who are able to seek compensation through AFCA.”