Monday, July 30, 2018 - Posted by Michael McCulloch
The Australian Financial Complaints Authority (AFCA) has recently released a consultation paper which sets out how the new external dispute resolution scheme proposes to recover the cost of it operations.
A three-phase funding model has been developed by AFCA. Extracted from the AFCA Funding Model Overview:
Phase I - Transition Funding
- Meeting the costs of AFCA's establishment so that it is adequately prepared to receive and handle complaints from commencement on 01/11/2018.
- Transition funding covers both the governance-related costs and the costs of establishing and operationalising AFCA to be ready to receive up to 1,000 complaints in the first week of commencement. In the May 2018 the Federal Governement allocated $1.7 million as contribution to AFCA's 2018-19 establishment costs.
Phase II - Interim Funding Model
- To apply for the first three years of AFCA operations (FY2018/2019 – FY2020/2021). During this period a hybrid funding model is proposed to be applied - based on aspects of the existing scheme funding arrangements for Firms that are FOS and CIO scheme members, and the APRA levy model for superannuation trustees who become AFCA members.
- The first two months of funding in 2018-19 cover the operations of the FOS scheme (operated by AFCA), funded by FOS members who transitioned their membership to AFCA on 1 May 2018, with the next two months funded by both FOS and CIO members. The subsequent eight months will fund the newly formed AFCA from its commencement on 1 November 2018, and will be managed in accordance with the interim funding model, outlined in this funding model overview.
- The interim funding arrangements will apply while AFCA establishes an evidence base of complaint volumes and complexity in an expanded jurisdiction, and settles complaint handling approaches and required skills/resources to manage the full range of complaints.
Phase III - A Long-Term Funding Model
- A long-term funding model – to be adopted following a full funding review based on complaint forecasts, operational efficiency savings across the consolidated scheme, and resource requirements for the long-term future of AFCA.
- The review will seek options for a revised funding model developed from consultation with stakeholders and settlement by the AFCA board following discussion with the Minister for Revenue and Financial Services and ASIC. The long-term funding model is proposed to be implemented from July 2021.
Feedback regarding the consultation paper can be directed to AFCA via email