Australia’s new government entity, designed to support small businesses (SMBs) claiming mistreatment by their banks, has opened its doors, reports in Smart Company said this week.
The Australian Financial Complaints Authority (AFCA) has officially launched, and small business owners will have the opportunity to be compensated up to AUS$1 million (about $720,000 USD) to resolve complaints. The AFCA will replace the Financial Ombudsman Services, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal, reports explained, after policymakers announced plans to create the body earlier this year.
Small businesses with disputes can go to the AFCA, which will first tackle any issues via informal methods, including mediation. If a matter is not resolved, the AFCA has the authority to set financial and other agreements, and force financial services companies to take courses of action to resolve the dispute. Requirements might include debt forgiveness, waiving or repaying fees, or rectifying contracts, according to reports.
The AFCA will be headed by Chief Ombudsman and CEO David Locke, who told the publication that small businesses “need to be able to access dispute resolution services quickly, easily and appropriate to their specific needs. Due to the costs involved, the courts are not a practical option for most small businesses. This focus on support for small business is reflected in AFCA’s strategy; operationally we are providing additional resources to consider small business complaints, as well as ensuring that the process for considering complaints from small businesses meets their needs and is efficient.”
The government defines a small business as a company with fewer than 100 employees, for the purposes of initiating a dispute with the AFCA, reports said.
The new body comes as Australian policymakers continue to raise concerns about the market’s largest financial institutions (FIs) and allegations of misconduct with consumers and small businesses alike. As the government explores how to mitigate the issue, the nation’s Commissioner Kenneth Hayne released an interim report earlier this year, noting that there is little evidence to support the need for overhauling the legal framework to expand borrower protections to small businesses.