THE Ombudsman and Chief Executive of the Credit and Investments Ombudsman (CIO), Raj Venga, today excoriated the government’s move to introduce legislation into the Senate to create a ‘one-stop-shop’ ombudsman, the Australian Financial Complaints Authority (AFCA). 

AFCA is intended to replace CIO, the Financial Ombudsman Service (FOS) and the Superannuation Complaints Tribunal (SCT) from 1 July 2018, and is in response to a review of financial sector ombudsman schemes led by Professor Ian Ramsay.

"The one-stop shop is being trumpeted as something entirely new, but the government has simply dusted off and reproduced benchmarks that were first published in 1997, and which already apply to CIO and FOS," says Mr Raj Venga, CEO and Ombudsman, CIO.

"There’s nothing new here.  AFCA will essentially have the same powers and jurisdiction as CIO, FOS and the SCT:

• The SCT already possesses the ‘additional powers’ that are being given to AFCA for superannuation complaints.
   
• CIO and FOS need only amend their existing terms of reference to incorporate those few extra requirements that are to apply to AFCA which do not already apply to CIO and FOS.
   
• The proposal to allow ASIC to issue ‘directions’ to AFCA adds little, if anything, to ASIC’s regulatory oversight. There is already the ability to revoke CIO or FOS’ approval. This is a far greater incentive for CIO and FOS to comply with regulatory requirements than the threat of a direction from ASIC.

"More significantly, since only one scheme will be authorised by the Minister, it is inconceivable that the Minister would revoke AFCA’s authorisation and leave hundreds of thousands of consumers with absolutely no redress against financial firms other than through costly legal proceedings. What then is the sanction for poor performance or non-compliance by AFCA?  A single scheme will result in a weaker system of external dispute resolution.

"We’re being sold a pup. AFCA will have no greater or effective powers than FOS, CIO and the SCT.  It ticks none of the boxes and it fixes nothing.  AFCA is a pitiful attempt to fend off calls for a Royal Commission.

"It also makes absolutely no sense to design a scheme such as AFCA without the benefit of the findings of a Royal Commission’.

"AFCA is not fit for purpose. It will neither provide better consumer outcomes nor be able to address past, or prevent future, financial scandals.

"AFCA is not equipped to weed out poor entrenched corporate culture or address the string of financial scandals that regularly grace the pages of our newspapers. Only a Royal Commission can do this.  Not being able to investigate the root cause of these scandals, AFCA will be powerless to prevent their re-occurrence to the detriment of consumers. 

"Not having statutory powers, AFCA will not be able to redress the power imbalance between big banks and small businesses and primary producer borrowers, or deal effectively with small business claims against banks, even with expanded monetary limits and compensation caps. 

"For example, AFCA will not be able to join, bind or obtain information from third parties that have been appointed by a bank, such as valuers, investigative accountants and receivers.  Nor will it be able to make or enforce decisions against them.

(This was specifically recommended by both the Parliamentary Joint Committee on Corporations and Financial Services (The Impairment of Customer Loans) and the Small Business Loans Inquiry Report by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO)).

"AFCA will not be able to accept complaints from primary producer borrowers who have previously undertaken farm debt mediation, another recommendation of the ASBFEO.

"Nor will AFCA be able to accept small business complaints against commercial lenders that are not required to be licensed. Presently, no licensing is required for commercial lending creating an obvious work-around.

"Consumers will also not be able to enforce AFCA’s decisions or seek a judicial review of an unfavourable AFCA decision.

"AFCA is a rebadging exercise that achieves nothing.  Referring to it as an ‘Authority’ doesn’t magically make this non-statutory body a statutory one.

"AFCA is nothing more than a political announcement and the appearance of action."

* CIO is an alternative dispute resolution scheme approved by the Australian Securities and Investments Commission to provide consumers with an alternative to legal proceedings for resolving financial services-related disputes with members of CIO, which include finance brokers, non-bank lenders, payday lenders, timeshare operators, mutual banks, financial planners and debt purchasers.

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THE Joint Committee of Public Accounts and Audit has tabled its report on Commonwealth Procurement based on the following Auditor-General’s reports:

• No. 1 (2016-17), Procurement of the International Centre for Complex Project Management to Assist on the OneSKY Australia Program;
• No. 13 (2016-17), Delivery of Health Services in Onshore Immigration Detention; and
• No. 16 (2016-17), Offshore Processing Centres in Nauru and Papua New Guinea: Procurement of Garrison Support and Welfare Services.

Procurement is core business for Commonwealth agencies and achieving value for money is expected to be a central consideration.

Committee Chair Senator Dean Smith said the Committee had made a number of recommendations in its report to improve procurement management by the agencies under review.

“Effective Commonwealth procurement will continue to be a strong focus of the Joint Committee for Public Accounts and Audit in its role in scrutinising the governance, performance and accountability of Commonwealth agencies,” Senator Smith said.

The report makes nine recommendations, including that:

• Airservices Australia provide the Committee with a post-implementation progress report for each of the audit recommendations; report back on a number of matters to demonstrate its improved management of probity in procurement; and report back on implementation of the audit findings of Audit Report No. 46, Conduct of the OneSKY Tender;
• the Department of the Finance consolidate procurement guidance as it relates to corporate Commonwealth entities, to ensure such entities more strictly apply the Commonwealth Procurement Rules;
• the Australian National Audit Office consider a third-stage audit into the conduct of the OneSKY tender by Airservices and any associated matters; and a performance audit of the next Department of Immigration and Border Protection procurement of garrison support and welfare services; and
• the Department of Immigration and Border Protection provide the Committee with a post-implementation progress report for each of the audit recommendations in Audit Report No. 16 (2016-17); and report back on its implementation of appropriate performance monitoring of the contractor for the provision of health services in onshore immigration detention and implementation of a risk-based remediation plan.

 Interested members of the public may wish to track the Committee via the website. 

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THE Parliamentary Standing Committee on Public Works will hold public hearings in Canberra tomorrow to examine three proposed projects:

• Construction of the Treloar E Large Technology Objects Store to accommodate the planned acquisition of large technology objects in Mitchell, ACT.  The estimated cost of the project is $16.1 million (excluding GST).
• Delivery of a Satellite Ground Station to provide anchoring of Wideband Global Satellites. This is part of a multi-phase project to provide the requisite range of strategic and tactical satellite communications capabilities. The estimated cost of the project is $33.9 million (excluding GST).
• Building refresh and fit-out of Discovery House in Woden, ACT.  The estimated cost of the project is $39.7 million (excluding GST).

Public hearing details: 9:15 am to 2:30 pm, Friday, 15 September 2017, Committee Room 1R3, Parliament House, Canberra 

9.15 am – 10.00am:     Australian War Memorial
11.15am – 12.00pm:     Department of Defence
1.15pm – 2.00pm:        IP Australia
2:30pm:                          Close

The hearing will be broadcast live at aph.gov.au/live.

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THE Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has welcomed the Government’s landmark move to establish a new one-stop-shop to resolve small business disputes with banks – the Australian Financial Complaints Authority (AFCA).

Ombudsman Kate Carnell said the initiative addressed a key recommendation from ASBFEO’s Small Business Loans Inquiry and would significantly improve access to justice, especially for capital-intensive enterprises.

AFCA will consolidate the existing Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT). 

A small business will be able to seek resolution of a dispute where the credit facility is up to $5 million and potentially receive compensation up to $1 million.

Ms Carnell said the FOS was currently limited to considering disputes of not more than $500,000 arising from a credit facility no higher than $2 million.

“This excludes many small businesses,” she said.

“Small businesses do not have the money or time to challenge banks through the court system and there is a significant power imbalance between banks and small businesses.

“Small businesses do not have the financial capacity to hire expert legal advice to help them overcome this disadvantage.”

The new one-stop-shop will be able to make binding determinations.

Ms Carnell said the higher compensation cap should incentivise banks to resolve disputes through internal processes before progressing to the AFCA.

“The Government’s proposed model will provide a genuine alternate dispute resolution option in a forum where the needs of small business are understood,” she said.

“It will save time and money by significantly reducing the need for litigation.”

Ms Carnell also welcomed the proposed transitional arrangements and the Government’s commitment to consult on AFCA’s terms of reference.

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ORANGE will host the first regional public hearing of the Select Committee on Regional Development and Decentralisation. 

The Chair of the Committee, Dr John McVeigh MP said, “the Committee is looking forward to kicking off our public hearing program in Orange.  This will be the first of a series of public hearings we will hold around the country.  The Committee wants to engage with regional and rural towns about the issues affecting them, and to learn more about best practice for the development of sustainable and engaged regional communities.”

“Orange is a good example of a regional town with a mix of public and private decentralisation, as well as regional development initiatives driven by the local community.  ” Dr McVeigh said. 

Public hearing details: 10:00 am to 2:30 pm, Monday, 18 September, Moresby Room, Ex-Services’ Club, 231-243 Anson St, Orange, NSW 

10.00 am: Orange City Council
10.45 am: Regional Development Australia Central West
11.30 am: Centre for Economic and Regional Development
12.15 pm: Lunch
1.00 pm: NSW Department of Primary Industries and NSW Rural Assistance Authority
1.45 pm: Orange Business Chamber
2.30 pm: Close

The hearing will be broadcast live at aph.gov.au/live.

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THE House Environment and Energy Committee will hear from the Australian Energy Market Operator (AEMO) at a public hearing tomorrow for the inquiry into modernising Australia’s electricity grid.

The Chair of the Committee, Andrew Broad MP, said the Committee was looking forward to hearing from AEMO about measures to ensure the security and reliability of the electricity system, both in the short term and as the system continues to evolve.

“As the market operator, AEMO is on the front line of the changes underway in the electricity grid. The Committee is keen to hear from AEMO what measures it thinks will encourage more dispatchable capability on the grid,” Mr Broad said.

The Committee will also hear from the Energy Efficiency Council, which represents stakeholders with experience in energy efficiency and related issues, such as demand management.

The Deputy Chair of the Committee, Mr Pat Conroy MP, said the Committee was looking forward to hearing about the role of demand management in achieving a more reliable and affordable electricity system.

“Demand management is an important consideration for the Committee as it examines how to ensure a responsive modern grid,” Mr Conroy said.

As part of the inquiry, the Committee is encouraging members of the community to share their views on the electricity system via an online questionnaire.

Further information about the inquiry, including submissions from organisations appearing at the hearings, is available on the inquiry website.

Public hearing details: 9:45 am to 11:15 am, Thursday, 14 September, Parliament House, Canberra

The hearing will be broadcast live at aph.gov.au/live

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THE House Committee on Economics will scrutinise the Australian Prudential Regulation Authority (APRA), as part of its review of the performance and strengths of Australia’s financial and banking regulator.

The Chair of the committee, David Coleman MP, said ‘the hearing will enable the Committee to scrutinise APRA on its performance and operation, including the adoption of “unquestionably strong” capital benchmarks for the four major banks, and further measures to reinforce sound residential mortgage lending practices. 

The committee is also likely to scrutinise APRA on other activities relating to the banking sector, including its inquiry into governance and culture at the Commonwealth Bank.

APRA is the prudential regulator of Australia’s financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most of the superannuation industry.

Public hearing details: 11.15 am to 1.15 pm, Wednesday 13 September, Committee Room 2R1, Parliament House, Canberra 

11.15am – 1.15pm: Australian Prudential Regulation Authority (APRA)
1:15pm: Close

The hearing will be broadcast live at aph.gov.au/live

Interested members of the public may wish to track the committee via the website. 

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THE House Committee on Economics will scrutinise the Australian Securities and Investments Commission (ASIC), as part of its review of the performance and operation of Australia’s corporate regulator.

The Chair of the committee, David Coleman MP, said ‘the hearing will provide the Committee with the opportunity to scrutinise ASIC on its role in promoting investor and consumer confidence, and in enforcing Australian corporate law.’

ASIC regulates Australian companies, financial markets, financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit. ASIC is empowered to protect consumers against misleading or deceptive and unconscionable conduct affecting all financial products and services, including credit.

Public hearing details: 12.15 pm to 1.55 pm, Thursday 14 September, Committee Room 2R1, Parliament House, Canberra

12.15pm – 1.55pm: Australian Securities and Investments Commission
1:55pm: Close

The hearing will be broadcast live at aph.gov.au/live

 Interested members of the public may wish to track the committee via the website. 

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