AFCA to begin naming financial firms
From 1 October 2019, AFCA will begin naming financial firms within its published determinations.
Until now, AFCA (and its predecessor schemes) anonymised all determinations. However, following a limited consultation, the Australian Securities and Investment Commission (ASIC) has approved the necessary changes to AFCA’s Rules and Operating Guidelines.
In announcing its approval of the rule change, ASIC indicated that the intention was to enhance transparency and accountability of financial firms and their complaints handling processes.
Notably, the rule change will apply to all determinations published from 1 October 2019, regardless of when the complaint was received by AFCA.
The rule change imposes an additional (and potentially significant) reputational risk to those financial firms on the receiving end of an AFCA complaint. The change also coincides with AFCA’s announcement that it intends to adopt a new approach to publishing complaint data, comparing different financial firms and their individual responses to AFCA complaints. The new approach involves publishing the data more frequently (every 6 months instead of every 12 months) and improving accessibility by reporting raw numbers of complaints instead the more complicated metric employed by predecessor schemes.
The above changes are consistent with AFCA’s publicly stated intention to increase accountability of financial firms and will no doubt impose additional pressure on financial firms (and their liability insurers) to respond to and engage promptly with all notifications of complaints received from AFCA.