In brief

Monday saw ASIC release Consultation Paper 298 and the draft updated Regulatory Guide 139, Oversight of AFCA  for public consultation. Set to take effect no later than 1 November 2018, ASIC is consulting with the general public for a five week period on a small number of relevant policy issues. This follows on from the Review of the financial system external dispute resolution and complaints framework led by Professor Ian Ramsay, and Treasury’s AFCA consultation paper released in November 2017. ASIC invites interested stakeholders to respond to the consultation by 6 April 2018.

What you need to know

ASIC is seeking feedback on the three key issues of:

  • Referral of matters by AFCA to ASIC;
  • The role of the independent assessor; and
  • External Dispute Resolution (EDR) disclosure obligations.

Referring matters to appropriate authorities

ASIC is seeking feedback regarding referral of matters and reporting by AFCA to ASIC. It is proposed that:

  • reporting obligations will require AFCA to report to ASIC on serious contraventions by a financial firm (including the licensee, or a representative or employee); and
  • AFCA must make reports within a reasonable time but no later than 30 days of either becoming aware of the occurrence or potential occurrence of a serious contravention or identification of a systemic issue.

ASIC is seeking feedback on whether the proposed timeframe is sufficient for reporting serious contraventions or systemic issues.

With regard to what exactly is a ‘serious’ contravention, the updated RG139 proposes that a ‘serious’ contravention (and therefore reportable by AFCA to ASIC) exists if there is sufficient facts or information to found an objectively reasonable belief that the contravention is serious. A reasonable belief will be formed if a reasonable person expects that AFCA would report the matter to ASIC or if AFCA is of the view a serious contravention may have occurred. The proposal takes a broad approach to reporting and ASIC seeks feedback on whether you agree with such approach.

Role of the independent assessor

AFCA is required to have an independent assessor with responsibility, not to review the merits of the AFCA decision, but to review complaints about service issues in AFCA’s dispute handling. ASIC proposes that the primary role of the assessor will be to respond to complaints concerning how AFCA dealt with a complaint, report on issues concerning AFCA’s handling operations and performance, and recommend remedies on handling operations and performance. ASIC proposes that it is not the role of the independent assessor to undertake a merits review or re-open a complaint.

In addition, ASIC proposes that the independent assessor must be appointed by the AFCA board, have sufficient powers and resources, be independent and make quarterly reports to the AFCA Board and ASIC.

ASIC wants to know whether the proposed role and requirements of the independent assessor are appropriate.

External Dispute Resolution (EDR) Disclosure Obligations

ASIC seeks public response on EDR disclosure obligations. Financial firms, including trustees of regulated superannuation funds, must include EDR information in a range of disclosure documents to consumers. ASIC proposes that by no later than 1 November 2018 financial firms will refer to AFCA in all internal dispute resolution decisions and reasons; and on online information and forms that refer to EDR; and personalised disclosures such as periodic and exit statements.

Financial firms are invited to comment on whether the 1 November deadline provides sufficient time to update all of their legal disclosures and communications.


The establishment of AFCA is a significant reform in the financial sector. Helen Coonan, former senator and Howard government minister, will chair AFCA and has pledged that AFCA work to provide a free, fast and binding decision making body for resolving the expected large number of complaints in the financial services sector, including banking, superannuation and insurance. AFCA also intends to help industry improve their internal dispute resolution processes to become fairer and more efficient, with the objective of minimising the number of complaints that subsequently progress to AFCA.

This is an important opportunity for financial firms to have their say on the new regime and provide any comment on ASIC’s specified proposals by 6 April. More information on ASIC’s consultation process is available here.

In the coming months, Madgwicks will be hosting an in-house seminar on AFCA and the new framework financial firms will be required to operate under. In the meantime, if you have any concerns or issues you would like to discuss, please do not hesitate to contact Partner Rick Goldberg.

About the Author

Rick Goldberg

Rick is a highly experienced corporate and commercial lawyer, with particular expertise in financial services, managed funds and superannuation.

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