“We’re trending to 55,000 [cases] by next year and about 38,000 members, so you can appreciate from the magnitude of those numbers that a lot of it will come out of heightened awareness from the royal commission,” Coonan says. “But we’re ready for this. We’ve done a lot of work to get our rules in place, to have our funding model right and to have a very good board.”
Coonan admits that revelations of greed and mismanagement by financial services providers at the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and at the parliamentary committee’s review of the four major banks, will probably give AFCA plenty to do from day one.
“We’ve prepared for that,” Coonan says. “It’s going to be a baptism of fire.”
Replacing a ‘tortured process’
The path to AFCA started with a recommendation from the Ramsay Review, which spurred then-financial services minister Kelly O’Dwyer to announce the formation of a “one-stop shop for financial complaints” in February this year.
In March, Coonan was named the inaugural chair of the authority.
Consolidating the three existing complaints bodies into one, Coonan explains, will alleviate the “tortured process” of finding the right ombudsman, being caught in a lengthy dispute, or going to court against a provider.
“We hope to cut through all that,” she says.
Coonan says advisers will have an important role in the transition. From a compliance perspective, they need to make sure they adhere to ASIC’s mandatory updates. The most immediate requirements pertain to websites and general complaints brochures, which must be updated with “broader communications about how to complain”, including AFCA’s details, by November 1 this year.
Further requirements, including updating mandatory disclosure documents and periodic statements, are scheduled for enforcement in 2019.
Coonan also says financial planners have a personal responsibility to be proactive in educating their clients about the new complaints authority.
“Advisers need to be aware and understand how to refer clients to the new AFCA if they have a problem that they can’t resolve directly with their client,” Coonan says. “They need to know that there’s a one-stop shop, a super-duper complaint resolution body.”
Nip complaints in the bud
Claire Mackay, principal adviser at Quantum Financial Services and AFCA board member, says the transition to the new complaints body should not be too disruptive for advisers.
“For the vast majority of advisers, the move to AFCA won’t be a significant issue,” Mackay says. “However, it is a good reminder to review your systems to ensure you are applying best practice.”
Coonan’s advice to advisers is to be as open about client complaints as possible and to get on the front foot in terms of seeking resolution. She says this will be a crucial ingredient in winning back the public’s trust in light of the royal commission.
“If you come across a problem, don’t sweep it under the carpet. It’s much better to own it, to be frank and open with consumers and get it resolved,” Coonan says. “Of course, we’re there to help if you can’t but it’s obviously much better if these problems can get nipped in the bud.”
