Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has announced a single external complaints resolution body for small businesses to report complaints about financial firms.

The Australian Financial Complaints Authority (AFCA) replaces the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.

“With Australian Securities and Investments Commission oversight, the AFCA will provide free, fast and binding dispute resolution to small businesses, saving them time and money by significantly reducing the need for litigation,” Ms Carnell said.

“It will also possess the expertise to deal with small business lending disputes, significantly improving small business access to justice and providing the forum where the needs of small business are understood.

Small businesses with fewer than 100 employees will be able to seek resolution of a dispute where the credit facility is up to $5 million.

Ms Carnell said dispute cases could potentially receive compensation of up to $1 million. The compensation cap for agricultural small businesses is up to $2 million.

“The consolidation of the AFCA addresses a key recommendation of our Small Business Loans Inquiry,” said Ms Carnell. 

“We will monitor the AFCA’s engagement with small business disputes and hope to see a significant reduction in the number of small businesses winding up in court.”

Launching AFCA, independent Chair, the Hon. Helen Coonan said, “AFCA will play an important role in restoring trust in Australia’s financial institutions in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

“We will influence reform in the financial services sector by raising standards and improving internal practices to reduce and resolve disputes.”

AFCA Chief Executive and Chief Ombudsman, David Locke added, “AFCA will provide Australians with services that are easy to use, free and efficient. We will use a range of skills including conciliation and negotiation to find fair solutions for all the parties. Where matters cannot be settled then we will make timely and impartial determinations based upon the evidence. Any determinations of AFCA, if accepted by the consumer or small business, is binding on the financial services firm involved.”

“The official opening of AFCA’s doors is a significant milestone for the financial services sector and the consumers and small businesses who use these services every day.”

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