Labor senators on the Senate Economics Legislation Committee have issued a dissenting view in the committee’s review of the legislation that will establish the Australian Financial Complaints Authority. Let’s hope their views don’t prove persuasive.
The move to establish a single external dispute resolution service in the financial services industry follows last year’s recommendations of a review panel headed by Melbourne Law School professor of commercial law Ian Ramsay, which said consumer interests would be better served if the Financial Ombudsman Service, the Credit & Investment Ombudsman and the Superannuation Complaints Tribunal were merged into one body.
The Senate committee review of the bill, Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017, recommended that the bill be passed.
However, Labor senators provided additional comments, arguing that the merging of the Superannuation Complaints Tribunal, a statutory body, with two industry schemes would weaken protections for consumers.
They say “superannuation is not simply another financial service. The compulsory nature of savings and the long-term investment horizon mean that special care must be taken when considering policies for superannuation external dispute resolution.”
They cited stakeholder submissions, which argued that problems with the SCT were around funding levels rather than its structure as a tribunal.
The Labor senators do not address the Ramsay panel’s reasons for preferring an industry ombudsman scheme to a statutory tribunal, which were very clear.
Ramsay’s report said: “Industry ombudsman schemes provide benefits not observed or not observed to the same degree in bodies established by government, whose objectives and functions and operational flexibility are typically determined and constrained by the legislation under which they are established.
“Statutory schemes have tended to be more adversarial and legalistic, compared with industry ombudsman schemes, and this can impede accessibility.
“Statutory models have also tended to be more focused on addressing the individual dispute, rather than improving broader industry practice.”
Overall, the panel praised the work of the Financial Ombudsman Service and the Credit & Investment Ombudsman, saying they had shown themselves to be innovative and adaptive to changes in the financial system, changes in consumer expectations and changes to products and services.
The Labor senators devote a fair bit of space in their dissenting view to complaining that the establishment of the new body is largely a sideshow, designed to draw attention away from Labor’s call (and the community’s support) for a royal commission into banks.
Labor’s argument comes across as more of a political point-scoring exercise than a genuine bid to improve consumer outcomes.