The passage of legislation establishing the Australian Financial Complaints Authority (AFCA) will result in small businesses having access to “free, fast and binding” dispute resolution, according to Small Business Minister Craig Laundy.
The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill establishes a one-stop shop for the resolution of financial services and superannuation complaints made by consumers and small businesses.
“I am pleased to say that small businesses and primary producers will overwhelmingly benefit from the new AFCA scheme, with significant increases in the compensation available and a more flexible definition of a small business,” said Minister Laundy.
“The Turnbull Government has enhanced access to AFCA by redefining a small business as any business with fewer than 100 employees, and by lifting the compensation available to those small businesses that are primary producers to $2 million.”
The Government has decided that AFCA will start receiving disputes from no later than 1 November 2018. To achieve a smooth transition, the Government is seeking a proposal for a not-for-profit company to operate the AFCA scheme to be lodged with Treasury by 15 March 2018.
Commenting on the passage of the bill, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell said she was “particularly pleased” with the more flexible definition of a small business as fewer than 100 employees and a rise in the compensation cap for agricultural small business.
She continued, “It is good to see that 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 of up to $1 million,” Ms Carnell said.
“Small businesses do not have the time or the money to hire lawyers and challenge banks and other financial institutions through the court system.
“This will significantly improve small businesses access to justice, which we raised in our Small Business Loans Inquiry last year.
“The AFCA one-stop-shop will be free, fast and binding, and will provide the forum where the needs of small business are understood, which we hope will significantly reduce the need for litigation.