This week, Minister for Revenue and Financial Services Kelly O’Dwyer announced the establishment of an expert panel to assist with the transition to the new Australian Financial Complaints Authority (AFCA).
Representatives of the Financial Ombudsman Service and Superannuation Complaints Tribunal accepted an offer to sit on the panel, but the third organisation set to be replaced under the government’s plans – the Credit and Investments Ombudsman – was not included on the list of panel participants.
In a strongly worded statement issued yesterday, Credit and Investments Ombudsman (CIO) chief executive Raj Venga explained that his organisation’s omission from the project was due to an official boycott.
“CIO has declined an invitation from the Minister for Financial Services to join an expert reference panel charged with working through the transition process for its proposed ‘one-stop shop’,” Mr Venga said.
“CIO’s position is clear. It will not participate in any transitional discussions until full details have been released by the government and the bill has been passed in Parliament. It is entirely inappropriate for the minister to activate a transition team even before submissions from stakeholders have been released and industry has had an opportunity to debate it publicly and transparently.”
The ombudsman criticised the government’s decision not to invite industry participants onto the transition panel, arguing their involvement is essential in the development of fair and effective terms of reference.
“It is outrageous that industry is not being represented on the expert reference panel,” he said.
Mr Venga also reiterated the CIO’s broader concerns with the establishment of AFCA, arguing that the new body will be tantamount to “old wine in a new bottle”.
“The reality is that AFCA will neither provide better consumer outcomes nor be able to address past, or prevent future, financial scandals,” he said.
“It is not equipped to weed out poor entrenched corporate culture or address the string of financial scandals that regularly grace the pages of our newspapers. Not being able to investigate the root cause of these scandals, AFCA will be powerless to prevent their re-occurrence.”
CIO estimates that AFCA will have to deal with 117,000 complaints in its first year of operation, at a cost of $137 million to the financial services industry.
