Credit Ombudsman Raj Venga has lashed the government for pushing ahead with plans to close down three external dispute resolution bodies before the relevant legislation has passed.
On Tuesday August 22, 2017, Minister for Revenue and Financial Services Kelly O’Dwyer announced the establishment of the government’s Australian Financial Complaints Authority (AFCA) transition team reference panel.
Plans to create the AFCA were announced in the May 2017 Federal Budget. The new one-stop-shop complaints authority will replace three existing external dispute resolution bodies: the Financial Ombudsman Service, the Credit and Investments Ombudsman Service, and the Superannuation Complaints Tribunal.
In a statement, O’Dwyer said the expert reference panel, led by former assistant governor of the Reserve Bank of Australia Malcolm Edey, was established by the government to ensure a smooth transition to the AFCA. “This panel will provide expert knowledge and experience to assist the transition team,” the statement said.
The four members of AFCA reference panel include Financial Ombudsman Service chief ombudsman Shane Tregillis and Superannuation Complaints Tribunal chair Helen Davis.
It is notable that there is no representative from the Credit and Investments Ombudsman Service on the panel, and O’Dwyer’s office noted that invitations to serve on the panel were issued to all three of the existing external dispute resolution bodies.
“It is important,” O’Dwyer said, “that the AFCA transition team draw on existing dispute resolution expertise and a wide range of views, to make sure the AFCA is fit for purpose and meets the needs of consumers, small business and industry.”
Credit and Investments Ombudsman Raj Venga told Investment Magazine that he had declined the invitation to be part of the panel.
“We have told the government and Dr Edey that we do not think it is appropriate to establish a transition panel before the legislation has even passed,” he said. “The legislation is not due to be tabled in parliament till September 4, and it is not clear the government has the numbers to pass it, so it is almost arrogant to be pushing ahead as if it is a done deal.”
Venga questioned the government’s authority to pass legislation given a number of members of the Coalition are awaiting High Court rulings on their dual citizenship status and whether this excludes them from holding office.
He also argued it is “highly inappropriate” for the three external dispute resolution bodies to participate in a transition panel before it was clear whether they might be competing in a tender to run the new single body.
No industry representatives
Another complaint Venga has about the AFCA transition reference panel is that it does not include any industry representatives.
“Industry will be funding it so it is odd not to have them involved in the transition panel,” he said. “For these types of bodies to be effective they need buy in from industry and for consumers to trust in the process.”
The two other members appointed to the AFCA reference panel are Self Employed Australia director Robin Buckham (to represent small business), and Berrill & Watson principal and SCT advisory council member John Berrill (to represent consumers).
Venga said modelling produced by his office suggests a 50 per cent increase in the number of overall complaints the AFCA would be likely to receive in its first year of operations, rising to approximately 117,000 cases. He estimates the cost of running the new combined body would be roughly $137 million in its first year. The combined annual cost of running the three separate external dispute resolution bodies is $57 million.