The rules and operational guidelines which will be utilised by the Australian Financial Complaints Authority (AFCA) need to be released as soon as possible to enable superannuation funds to accomplish what represents a major and expensive transition, according to the Association of Superannuation Funds of Australia (ASFA).
In a submission filed with AFCA late last month, ASFA said that while financial services firms were faced with significant transitionary issues with respect to external dispute resolution (EDR) arrangements, superannuation funds were being particularly challenged.
“… for superannuation providers the transition involves a quantum shift from a purely legislative regime to one that is a hybrid of legislation, regulations, contractually based rules, operational guidelines, and [Australian Securities and Investments Commission] ASIC regulatory requirements,” the ASFA submission said.
In doing so, it pointed to the lack of detail around the arrangements, stating that while some of the materials were in place (primary legislation and regulations), many were not.
“… some have only just been released (ASIC regulatory guidance on oversight of AFCA, finalised on 20 June), some are only in draft form (additional legislative amendments, Rules, independent assessor Terms of Reference), and others have not yet been made available even in draft (transitional arrangements, operational guidelines and interim funding model),” the ASFA submission said.
Further, it pointed to shortcomings with respect to AFCA’s communications processes, stating the new body’s engagement process for superannuation remains in its early stages – “so much so that while all financial firms are required to become members of AFCA by 21 September, there is as yet no membership process in place for superannuation trustees”.
“In particular, we expect the AFCA’s Operational Guidelines to provide a significant level of additional detail on how the Rules will operate in practice,” it said.
“We understand that the release of the Guidelines was delayed to avoid the need to amend them should the consultation process lead to amendments in the Rules,” the submission said. “While this logic is certainly sound, we anticipate that many of the questions raised during this consultation will relate to matters that have already been addressed in the Guidelines.”
“ASFA considers it critical that AFCA finalises its Rules and releases its Operational Guidelines as quickly as possible, to provide member firms with a complete picture of their EDR obligations. While these are currently scheduled for finalisation in September, this leaves member firms with little time to assess the implications of any changes, and operationalise the requirements, prior to AFCA commencing to take complaints from 1 November.”
