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The corporate regulator has suspended and cancelled the credit licences of financial services businesses that have not complied with obligations under the new AFCA regime.
The Australian Securities and Investments Commission (ASIC) has taken action to ensure that financial services providers are compliant with their obligations to secure a membership with the Australian Financial Complaints Authority (AFCA).
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AFCA has advised ASIC that since it commenced operations on 1 November 2018, 58 financial services licensees and 217 credit licensees, who previously held external dispute membership with one of the previous schemes, had not obtained AFCA membership and “may be in breach of their licence conduct obligations”.
Following an intervention from ASIC into potentially non-compliant financial and credit licensees:
- 50 financial services licensees subsequently obtained AFCA membership
- four financial services licensees voluntarily cancelled their licenses
- four financial services licensees were cancelled or suspended by ASIC
- 131 credit licensees subsequently obtained AFCA membership
- 38 credit licensees voluntarily cancelled their licenses
- 48 credit licensees were cancelled or suspended by ASIC
ASIC commissioner Sean Hughes commented: “ASIC has taken proactive measures to protect consumers from those few financial services licensees and credit licensees who were not complying with the obligations of their licence by being a member of AFCA.
“ASIC’s intervention means that consumers now have access to the independent dispute resolution scheme of AFCA if their complaints are not being properly considered by the financial services licensee or credit licensee.”
The corporate regulator added that it would continue to work closely with AFCA to identify financial services licensees and credit licensees that are not complying with their obligations, and would take formal action to cancel or suspend licenses where entities fail to comply.
AFCA was formed to provide external dispute resolution services for consumers that have unresolved complaints with entities providing financial and credit services, replacing the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
All financial services licensees and credit licensees were required to obtain AFCA membership from 1 November 2018, as part of their general conduct obligations.
[Related: ASIC urged to ‘codify’ broker obligations]
