Prepared by Nicholas Cardone
AFCA will replace FOS and CIO as the sole external dispute resolution scheme in Australia from 1 November 2018.
To support the introduction of AFCA, you must complete the following things:
- Your FSG and Dispute Resolution Policies must be amended to replace references to FOS/CIO with AFCA – FSGs must be amended by 1 July 2019, while your internal dispute resolution policies must be amended by 31 October 2018. If you are a ‘Rescue’ package client we will provide you with the required wording for these amendments in due course. All changes should be clearly communicated with your staff.
- Your PI insurance policy must be amended to reflect the new monetary limit and compensation caps of AFCA – AFCA’s monetary limits and compensation caps are almost double those under the existing FOS/CIO regime. A lot of PI insurance policies we have seen have sub-limits which match the FOS/CIO existing limits and caps. If the Licensee’s existing PI policy only cover claims that are within the existing FOS/CIO limits, it could be left out-of-pocket in the event of an AFCA compensation order. You should speak with your insurance broker about this ASAP.
Other proposed changes will also require AFS licensees to disclose particular data about their internal dispute resolution activities to ASIC. ASIC will consult on these proposed changes shortly and we will update you on the key details.
FOS and CIO will continue to have jurisdiction on complaints until 1 November 2018, so it’s business as usual until then!